California regulators plan to address pleas from stakeholders in the energy storage industry to free up money for the state’s behind-the-meter battery incentive program, directing an additional $108.5 million that could allow about 100 megawatts of stalled projects in low-income and disadvantaged communities to be built this year.
But regulators don’t plan to shift more money to the program from a much larger budget dedicated to serving low-income or medically vulnerable people living in the parts of the state most threatened by wildfires and fire-prevention grid outages.
Wednesday’s proposed decision from the California Public Utilities Commission, which is expected to come to a vote in late October, applies to the state's Self-Generation Incentive Program (SGIP), which has $1.2 billion available through 2024 to cover part of the costs of installing batteries at homes and businesses.
The CPUC hopes to move $108.5 million from the undersubscribed large-scale storage budget to the oversubscribed equity budget, with $100 million going to nonresidential projects and $8.5 million to residential projects. A lottery will be used to determine the allocation of the extra funding to waitlisted equity projects.
Late last year, the CPUC responded to the state’s growing wildfire challenge by earmarking $613 million of the SGIP budget to “equity-resiliency” customers, offering lucrative $1-per-watt incentives — enough to fully cover most battery installations — to people at the highest risk of being harmed by power outages meant to prevent power lines from sparking deadly wildfires.
But that shift of funds to vulnerable customers also reduced the amount of money in SGIP’s “equity” budget, which provides incentives of 85 cents per watt to low-income and disadvantaged areas that aren’t in zones designated as being at high risk of fires or outages.
As a result, the nonresidential storage equity budget — meant for schools, hospitals, government buildings and businesses in disadvantaged census tracts across the state — saw its existing $53 million budget oversubscribed by $306 million soon after the SGIP program opened for applications this spring. The residential portion of the equity budget was also oversubscribed by about $20 million.
At the same time, other SGIP budget categories were undersubscribed, including its 50-cent-per-watt incentives for large-scale energy storage, which as of August had seen only $45 million in applications out of a budget of $298 million. Meanwhile, the equity-resiliency budget category had received nearly $370 million in applications, but it still had $244 million remaining as of this week.
Some energy storage companies argued that the CPUC should redirect unspent money to waitlisted projects in low-income and disadvantaged communities. In June, the California Energy Storage Alliance (CESA) asked the CPUC to shift $160 million from the undersubscribed large-scale energy storage budget and another $150 million from the equity-resiliency budget.
CESA’s proposal to shift money from the equity-resiliency budget met with stiff opposition from groups representing low-income communities threatened by the fire-prevention grid outages that left hundreds of thousands of customers of Pacific Gas & Electric without power last year, as well as smaller numbers of customers of the state’s other two investor-owned utilities.
The massive and deadly wildfires that have erupted across California over the past month have boosted this argument. So has the increase in demand for equity-resiliency incentives, which has grown significantly since June.
Storage vendors have been taking advantage of the lucrative incentives this program offers, despite early challenges in identifying customers that are eligible for them. Last month, Grid Alternatives, a nonprofit that installs solar and batteries for low-income residents, and U.S. residential solar-storage provider Sunrun announced a partnership that’s offering free batteries to customers eligible for the equity-resiliency fund using the program’s high incentives. It’s the first time Sunrun has provided batteries without an accompanying rooftop solar installation.
SGIP funds are also boosting the economics of large-scale solar-storage projects being rolled out by community-choice aggregators in PG&E service territory, and in modeling the costs and benefits of building microgrids in fire-prone parts of the state.
These new realities were reflected in CESA's new proposal last month, which abandoned its previous request for funds from the equity-resiliency budget. Instead, it laid out the plan now adopted by the CPUC’s proposed decision.
Jin Noh, CESA’s senior policy manager, described this as an “incremental and cautious approach” to shifting SGIP funds.
“With the wildfires being so significant, and coming so early in the wildfire season, I do see the commission pretty much doubling down on their position that they want to maintain a focus on resiliency in this program,” he said in a Wednesday interview. “They want to be sure that the funds are going to support those that are most vulnerable.”
At the same time, the CPUC’s equity-resiliency definitions may still be excluding low-income communities that are under threat of wildfire-related blackouts, Ted Ko, vice president of policy and regulatory affairs for energy storage provider Stem, said in a Wednesday email.
“The recent heat waves, rolling blackouts and raging wildfires argue that the program allocation needs to adjust to a reality that is extremely different than eight months ago, when the allocations were approved,” he wrote.