by Jeff St. John
January 16, 2020

Last month, the California Public Utilities Commission proposed major changes to the Self-Generation Incentive Program, the state’s premier behind-the-meter battery funding source. The biggest change by far would be dedicating about $613 million, or nearly two-thirds of SGIP’s budget over the next six years, to its “equity resilience budget” for low-income, medically vulnerable and other disadvantaged people most likely to be negatively impacted due to fire-prevention blackouts.

CPUC’s move to turn SGIP into a rescue program for at-risk Californians is part of a massive public response to the state’s wildfire and power outage crisis. But it’s also a radical restructuring of a program that has allowed California to take the lead in behind-the-meter energy storage deployments, with generous incentives to bolster underlying business cases such as demand-charge management, energy arbitrage, solar shifting or emergency backup for commercial and industrial as well as residential customers. 

The CPUC’s proposal, meant to jump-start a process that can enable funds to flow to customers in time for the 2020 fire season, was hastily prepared, and it contained some errors that required a series of corrections over the holidays. (A redlined version [PDF] with the latest updates was released this week.)

This uncertainty has drawn questions from utilities tasked with identifying eligible customers and managing the funds, technology vendors reliant on SGIP for opening market opportunities, and environmental groups overseeing the program’s commitment to reducing greenhouse gas emissions.

That’s the backdrop for the flood of filings from key stakeholders this month, asking the CPUC to revise, expand or restrict some of the SGIP changes it has proposed.

The filings reveal conflicts between stakeholders over how far the SGIP program should be reoriented toward the CPUC’s new vision and how the change should be executed. Some filings pit one set of interests against another, such as arguments over how to split the budget between different customer classes and technologies. Others seek to clarify how utilities will define which customers are eligible for the equity budget or how they’ll share that information with vendors without sacrificing customer privacy.

Last month’s Energy Storage Monitor report from Wood Mackenzie and the Energy Storage Association forecasts that this year’s power outages will spur a big uptick in residential battery-solar systems in California in 2020, with vendors such as SunrunSunPowerEnphase and Tesla positioned to benefit. 

How the CPUC ends up adapting the SGIP program will play an important role in the growth of this market.

The view from Sunrun and Tesla 

As the top U.S. residential solar installer with a leading position in California solar-battery deployments, Sunrun has a major stake in how SGIP will work.

In its opening comments, Sunrun praised the CPUC’s focus on helping vulnerable customers but added a call for more flexibility in how the money is spent, noting that SGIP’s history shows that some categories like its existing equity budget have been left unspent due to lack of demand, while popular categories like residential storage have been chronically oversubscribed. 

Sunrun’s main proposal is to shift chunks of the $613 million equity resilience budget to different classes of customers in hopes of expanding the scope of households that can access it in time for the next wildfire season. That includes shifting $68 million back to the equity budget for low-income customers outside outage-prone areas. But it also includes adding nearly $30 million to boost the general residential budget to nearly $90 million, and extending a “resiliency adder” to moderate-income customers in fire-prone areas. 

Tesla, which has slipped significantly in the residential solar rankings but remains a major supplier of Powerwall batteries to the industry and a top recipient of SGIP funding, goes even further in its opening comments, calling for leaving just over half of SGIP’s budget through 2024 “unassigned and available based on demand” to avoid stranded budgets. For example, Tesla’s proposal would only earmark $244 million to the equity resilience budget, but it would allow more from unassigned budgets to flow to subscriptions that exceed that figure.  

The California Solar & Storage Association proposed a similar approach in the form of an “unallocated floating reserve,” noting that it’s a much faster and more efficient way to shift untapped funds than the existing method of filing advice letters, which take months to resolve. 

The challenge for all these proposals, according to opposition from utilities and state consumers advocates, is that they risk undermining the CPUC’s goal of protecting the state’s most vulnerable customers.

San Diego Gas & Electric wrote that proposals by Sunrun, Tesla and the California Solar & Storage Association would effectively take funds from the equity resiliency budget to “help developers sell to the same set of primarily more affluent customers.” 

And CalAdvocates, the CPUC’s ratepayer advocate office, argued in its reply comments that the CPUC should reject all proposals that would undermine its focus on the most vulnerable customers, given the limited funds available. SGIP’s proposed budget of $103 million per year is only enough to fully subsidize about 7,000 typical residential systems, it noted — but about 1.1 million customers could be eligible for funding based on a broad reading of the CPUC’s proposal. 

All of these parties, by the way, oppose efforts to boost the share of SGIP funds earmarked for “renewable generation” technologies, that is, fuel cells or other generators powered by biomethane. The National Fuel Cell Research Center asked to increase this budget from 15 percent to 25 percent of the total, while Southern California Gas and the California Clean Distributed Generation Coalition asked for an additional $100 million.

But the Sierra Club and the Natural Resources Defense Council argued that this budget should be reduced to 8 percent, where it stands today, on the grounds that much of it is based on “directed biogas” contracts with out-of-state producers with unclear carbon-reduction benefits. 

Finally, Tesla and Sunrun proposed lifting the caps that limit single developers to a fraction of overall grants available, at least after a year or so to keep the market open for multiple participants. That’s an obvious self-serving move but one that Tesla argued is justified, given that current caps are limiting it from applying for tens of millions of dollars of SGIP's unspent large-scale storage budgets. 

Defining who’s eligible 

The mismatch between potential demand and available funding has focused attention on how to define which customers are eligible for the equity resilience budget.

In simple terms, utilities are supporting more restrictive definitions, while vendors are seeking broader categories — and more help in finding the right customers. 

For example, the CPUC has asked utilities to consider low-income or medically vulnerable customers for the equity resilience budget if they live in a Tier 3 or Tier 2 High Fire Threat District, or if they’ve had their power shut off during two or more separate public-safety power shutoff (PSPS) events. Tesla and the California Solar & Storage Association both proposed that the CPUC should order utilities to develop tools or databases to help them evaluate customer eligibility.  

But as Southern California Edison argues in its reply comments, tools like these would be expensive and hard to turn around in time for this year’s round of SGIP funding, and sharing customer data could open up data confidentiality concerns. As an alternative, SCE proposed that utilities provide circuit-level PSPS data, and allow vendors to connect that with publicly available mapping tools to find out if customers have suffered multiple outages. 

SDG&E was more vocal in its calls for restricting eligibility, arguing that the “two or more outages” rule should require that at least one of them had lasted at least 24 hours and that participating battery systems should sign contracts assuring they will be “available and fully charged” before a PSPS event. These proposals drew pushback from vendors and trade groups, with the California Energy Storage Alliance arguing that the CPUC should “err on the side of inclusivity” in setting eligibility guidelines.  

CPUC’s proposal also opens up SGIP funds to critical public facilities in fire-prone areas — a broad category that’s open to multiple definitions that will need fine-tuning to match funds to the most useful projects. For example, the California Solar & Storage Association, the California Energy Storage Alliance and Tesla all asked the CPUC to refine its rules on grocery stores to allow big chains as well as smaller stores to be eligible, since they’re often the anchor of small communities. 

Finally, there’s the question of how community-choice aggregators, the public entities that are taking over an increasing share of utility customers’ energy procurement needs across the state, will participate in the SGIP rollout.

Marin Clean Energy and San Jose Clean Energy asked the CPUC to require utilities to work with community-choice aggregators on marketing and outreach to vulnerable customers eligible for SGIP’s incentives, rather than merely suggesting it — a nod to community-choice aggregators' adverse experiences with PG&E’s community outreach during its massive PSPS events this fall.