CPUC Issues Rebate Revamp for Storage

Well, they've done it. After much delay, the California Public Utilities Commission (CPUC) has finally issued their draft decision in Rulemaking 10-05-004 to modify the Self Generation Incentive Program (SGIP) and the rebates available for Advanced Energy Storage (AES).

The California SGIP program was originally based on state legislation designed to reduce peak energy demand. SGIP rebates were made available to many variations of on-site generation, including solar and natural gas co-generation. Subsequent legislation significantly altered the program, limiting rebates to wind and fuel cell projects. US&R successfully worked with VRB Power, Inc. and Strategen to include rebates for AES. US&R helped develop over 32 MWH of SGIP eligible projects in 2010.

However, recent legislation, SB 412 (2009), required a makeover of the program, basing incentives on green house gas (GHG) reductions instead of reducing peak demand. In addition, certain fuel cell developers, utilizing off-site bio-gas, began to monopolize the program. This resulted in a complete suspension of the program December 2010 until the new rules could be implemented.

The recent decision will be subject to further comments and workshops before it becomes final. We cannot know when new applications will be accepted, but we hope it will be soon. Here are the key points affecting AES:

1. Energy storage will still be an eligible technology in spite of some efforts to disqualify it based on no GHG reductions.
2. In addition, the draft decision will incentivize stand alone installations. The original program required AES to be associated with fuel cells or wind. This will remove that restriction.
3. The incentive will remain at $2 per Watt = $2,000 kW. Other technologies have had their incentives reduced, but storage will retain their previous incentive level.
4. Measurement and verification will increased, but the extent and cost will be determined in subsequent workshops.
5. Size limit restrictions have been lifted. Incentives are based on the first 3 MW of capacity, but installations over 5 MW had been disqualified entirely. That will no longer apply.
6. Generation will be allowed to be exported, with up to 25% not used on-site.
7. Substantial application fees will be required.
8. The SGIP incentive cannot pay for more than 30% of project cost - unless the project is ineligible for a tax credit.
9. Energy efficiency audits will be required - although the project will not be required to implement any recommendations.
10. Payment of the SGIP will no longer be 100% upon completion of the project. Instead, only 50% will be paid up front, with the remainder paid over 5 years based on kWh production. A capacity factor of 20% will be used for AES.

These are substantial changes for the SGIP program. We will be tracking and reporting on the final revisions.