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by Jeff St. John
February 20, 2019

After years of debate and study, California’s Self-Generation Incentive Program is on the verge of setting new rules to manage a key part of its mission: making sure that its fleet of state-funded behind-the-meter batteries are subtracting from, not adding to, the state’s greenhouse gas emissions.

This may seem like a relatively simple problem to solve from an electrochemical perspective, but that's not quite the case. Every energy storage system loses some energy from the time it’s stored to the time it’s discharged, with a typical modern lithium-ion battery system averaging about 80 to 85 percent round-trip efficiency. That puts the onus on battery operators to ensure they’re only charging with the cleanest power, and discharging to replace the dirtiest power, to make up for that lost energy. But according to multiple studies, today’s primary use cases for behind-the-meter batteries, such as demand charge management and backup power, fail to meet those needs.  

The California Public Utilities Commission (CPUC) has been studying this problem since 2015. Evaluations conducted for the CPUC by Itron in 2016 and 2017 have indicated that today’s Self-Generation Incentive Program-funded fleet has actually slightly increased GHG emissions compared to if they hadn’t been added to the grid, largely because they’re not being used in ways that maximize their consumption of renewable energy. After an initial CPUC staff proposal released last year to fix this issue was widely panned by utilities and battery vendors alike, the CPUC came back with a revised staff proposal in December, one that is seen as more likely to win commission approval later this year. 

But as this SGIP debate has shown, getting batteries to reduce carbon emissions a devilishly complicated problem to solve from a policy perspective. First, as we’ve noted in coverage of the SGIP issue, today’s economic incentives are misaligned with carbon reduction. It's a problem the CPUC’s new proposal seeks to remedy through penalties for not hitting carbon dioxide reduction thresholds — a solution that’s drawn opposition from energy storage advocates, but which is supported by utilities and ratepayer advocates. 

Second, in order to optimize their batteries to meet these new carbon reduction thresholds, SGIP projects will need some way to pull the data on the marginal GHG impact of every kilowatt-hour of energy stored up and discharged, at various points on the grid, in sub-hourly increments. This concept, dubbed a “GHG Signal,” is the centerpiece of the new SGIP regime. And while the CPUC staff proposal doesn’t make it explicit, it’s largely the product of one nonprofit software developer that’s been working on this challenge for the past five years.