CPUC proposes to spend $613 million of total $1.2 billion SGIP budget through 2024 on battery-solar systems for high-fire-risk customers.
Over its 13-year history, California’s Self-Generation Incentive Program has been the state’s primary driver for distributed solar, biomass power systems, fuel cells. and, over the past half-decade or so, behind-the-meter batteries.
Now California regulators are proposing a new role for SGIP: giving battery-solar backup systems to those at greatest risk of wildfires and blackouts.
On Wednesday, the California Public Utilities Commission issued a proposed decision (PDF) that would shift the majority of SGIP’s roughly $815 million budget through 2024 away from standard behind-the-meter battery systems and toward its “equity resilience budget.”
That’s the budget for low-income, disadvantaged or medically vulnerable people who live in areas at high risk of wildfires and fire-prevention public safety power shutoffs, like the blackouts that left millions of customers of bankrupt utility Pacific Gas & Electric without power for days at a time this fall.
In September, the California Public Utilities Commission (CPUC) directed $100 million in previously funded “equity budget” spending toward these high-risk customers, along with a boosted incentive of $1 per watt-hour that can almost completely cover the upfront costs of a typical residential solar-storage system.
Wednesday’s decision would retain this $1 per watt-hour incentive and shift 63 percent of the total budget through 2024, or $513 million, to serving these high-need customers. Added to September’s allocation, that’s $613 million, or half of SGIP’s $1.2 billion in present and future funding, that would go to the equity resiliency budget.
This combination of almost-free backup power and a customer base that really needs it could add another major boost to a market primed for major growth in response to PG&E’s blackouts. This month’s Energy Storage Monitor report from Wood Mackenzie and the Energy Storage Association predicts a big uptick in residential battery-solar systems in California starting in early 2020, with vendors such as Sunrun, SunPower, Enphase and Tesla positioned to benefit.
To pay for this major shift toward resiliency, the CPUC’s proposed budget would make significant cuts in all other categories of SGIP funding. Most critically, “general market large-scale storage systems,” a category that has helped boost commercial and industrial installations from vendors including Stem, Tesla, Green Charge Networks (now part of Engie) and others, will see allocations reduced from a current 52 percent to only 12 percent, leaving the category with access to about $360 million through 2024.
SGIP has helped California take by far the leading position in the country in behind-the-meter battery installations. But it’s also seen its challenges, as in 2016, when behind-the-meter storage vendors Stem and Swell were found to have taken advantage of flaws in the program’s online application process to win a majority of the awards in a $40 million solicitation, roughly half that year’s funding. The program has also been criticized for funding storage projects that haven’t reduced overall greenhouse gas emissions — an issue the CPUC addressed with a new set of GHG rules this year.
SGIP has never been able to fully spend its existing equity budget, since even a discounted battery-solar system is still too expensive for many of the low-income or medically challenged customers it targets to be able to afford. But this year’s blackouts prompted the CPUC to boost the incentive for those at greatest risk of blackouts, such as people on life-support machines, or low-income families with infants or elderly relatives reliant on air conditioning.
The CPUC has included specific groups, such as Central Valley disadvantaged communities and participants in existing multifamily housing solar programs, as eligible for its equity budget. Wednesday’s proposed decision would add a new category unavailable before this fall’s blackouts: those who can prove they’ve had their power shut off through “two or more discrete [public safety power shutoff] events prior to the date of application.” In other words, those most likely to have their power shut off again qualify even if they don’t fit the low-income or medical necessity criteria.
The CPUC doesn’t plan to vote on the proposed decision until mid-January at the earliest. If approved, Wednesday’s proposal would require utilities and other participants to start accepting applications for systems 10 kilowatts or under no later than March 1, 2020, “to help eligible customers install on-site batteries as soon as possible prior to the 2020 critical wildfire season.”