by Jeff St. John
June 14, 2019

Over the past six months, we’ve spent a good deal of time covering California’s top energy policy challenge: Pacific Gas & Electric’s bankruptcy and the state’s wildfire-prevention efforts. We’ve also been covering some long-running efforts to create market-based incentives and policies to boost distributed energy resource deployment and integration. 

Last week, California’s two biggest investor-owned utilities, PG&E and Southern California Edison, proposed a new tool to help customers facing wildfire-driven power disruptions, one that represents a convergence of these policy trends. It’s called a “resiliency adder,” and it’s one of the first incentives aimed specifically at linking customers in the state’s most wildfire-prone areas with the battery-solar systems that could help them ride through grid outages to come. 

PG&E's and SCE’s resiliency adder proposals are described in filings with the California Public Utilities Commission (CPUC), related to its work on the next phase of the state’s Self-Generation Incentive Program. SGIP is the country’s biggest program for behind-the-meter batteries and other on-site energy resources, and under state law passed last year it has about $800 million budgeted over the next five years.

But with the devastating wildfires of 2017 and 2018 forcing PG&E into bankruptcy — and the threat of future fires burdening the state’s other investor-owned utilities with massive potential liabilities — potentially widespread grid de-energizations are going to be a big part of California’s wildfire-prevention plan this year. Last weekend, PG&E shut off power to about 1,200 customers in the Napa and Sonoma areas, and then another 20,000 customers in the Sacramento region, its first public safety power shutoff events of the season. 

The utility has warned that it could be forced to black out much larger swaths of its territory if wind and weather conditions demand it. This threat has galvanized California lawmakers, regulators and energy industry stakeholders to find ways to use programs like SGIP to help bolster the state’s wildfire prevention efforts. 

That’s the concept behind the resiliency adder. In simple terms, both PG&E and SCE are proposing a significant increase in SGIP incentives for solar-storage systems for customers in areas that are at the highest risk of facing wildfires or grid de-energizations. 

PG&E proposed a resiliency adder of 15 cents per watt-hour, a “significant” 43 percent increase to the "Step 5" SGIP Residential incentive of 35 cents per watt-hour.

It specified that the adder “should be limited to the most impacted customers” — a designation that PG&E said should be left open to stakeholder suggestions and final CPUC approval, but could include “customers in higher fire risk areas,” or “other sensitive customer needs, communities, or critical services.”  

For its part, SCE proposed two different resiliency adder programs. The first would address critical services or public-use facilities to serve customers during de-energization events and would add 15 to 25 cents per watt-hour to existing incentives. The second would be for everyday customers in areas of the highest fire risk and would add 10 to 15 cents per watt-hour. 

The resiliency adder: A concept with broad backing 

PG&E's and SCE’s proposals came as part of their response to a CPUC ruling, seeking comments on a long list of policy issues for SGIP’s future implementation.

As we’ve noted in past coverage, SGIP’s greenhouse gas emissions mandate — an effort to ensure that batteries backed by the program help reduce the state’s carbon footprint — has been the subject of much controversy. So have differences between utilities and energy storage industry players on how the program’s incentives should be budgeted, and whether to increase incentives to help boost slowing commercial energy storage installations, to name a few hot-button issues. 

But on the subject of tapping SGIP to help wildfire-affected customers, stakeholders appear to be in broad agreement. The resiliency adder concept has also been backed in CPUC filings from groups including the California Energy Storage Alliance (CESA), the California Solar and Storage Association and the California Community Choice Association, which represents the community-choice aggregators (CCAs) that have grown to become a significant new force in the state’s energy future. 

In fact, Marin Clean Energy and Sonoma Clean Power, the two CCAs most impacted by the Northern California wildfires of the past two years, have implemented their own “Advanced Energy Rebuild” programs that offer a $5,000 incentive for solar systems paired with a 7.5-kilowatt-hour battery for homes and businesses being rebuilt after a fire. In a joint filing, Marin Clean Energy and Sonoma Clean Power noted that they would “support a 'resiliency adder,' especially for low-income and/or medical baseline customers, who are disproportionately affected by climate impacts and de-energization."

Likewise, CESA’s filing supports a resiliency adder, saying it would be “more likely to spur more immediate deployment of SGIP systems for resiliency purposes,” and proposing that it should be at least 20 percent more than the standard incentive rate. That’s actually lower than what PG&E and SCE have proposed, but as CESA policy manager Jin Noh pointed out in an interview, “We would be in support of a higher adder.”

Sunrun, the country’s leading residential third-party solar provider, has taken a lead in proposing solar-storage incentives and programs in response to California’s wildfire challenges. Back in February, it proposed using SGIP funds to help bolster adoption in California’s fire-prone areas. In its most recent SGIP filing, Sunrun proposed a resiliency adder of 15 cents per kilowatt-hour, similar to PG&E’s proposal, as well as a 10 cents per kilowatt-hour adder for “medical baseline” customers, or those with health conditions that require secure access to electricity to treat. 

“We’re helping the commission see that the SGIP funding can be a valuable tool for customers in vulnerable situations,” Anne Hoskins, Sunrun’s chief policy officer, said in an interview this week. While Sunrun still has some disagreements with utility proposals for other aspects of the SGIP program, the company says it's “happy to see that PG&E recognizes that storage can play an important role in resiliency — and we think, a very important role in the power shutoffs that are happening.” 

Backup generators instead?

Even CalAdvocates, the new name for CPUC’s Office of Ratepayer Advocates, which tends to oppose proposals that would increase customer costs, noted in its SGIP filing that it does not oppose the resiliency adder concept, although it added that the CPUC “should carefully consider the criteria for receiving the adder, as not all customers or communities encounter the same degree of risk.” 

One big question for the resiliency adder concept is whether it’s more cost-effective for customers facing long and frequent fire-prevention power outages to install solar-storage systems, or to simply buy a diesel-fueled backup generator.

“We understand that backup-only and mobile generators are available in the marketplace today at a fraction of the cost of permanently installed batteries designed to operate all year, that such generators may be better equipped to sustain power throughout the duration of a public safety power shutoff event and that these backup-only and mobile projects are not eligible for SGIP...incentives,” PG&E noted in its filing. 

At the same time, “residential or commercial customers would benefit from improved resiliency offered by solar paired with storage systems, assuming the system was sized properly, and their usage could be isolated to only meet critical loads,” it wrote. 

Most behind-the-meter batteries can’t support a site’s entire electrical load for more than a few hours. But as Hoskins noted, most of the residential customers installing Sunrun’s BrightBox battery systems in California today are also setting them up to power a handful of critical household loads, so that they can stretch their battery’s capacity over much longer time spans. 

And in the long run, any policy that pushes large numbers of Californians to buy and run diesel generators would obviously be antithetical to the state’s clean energy and carbon reduction goals — a fact noted in filings from utilities and energy storage industry advocates alike.