A breakdown of California’s SGIP battery rebate
The Self-Generation Incentive Program (SGIP) in California is one of the largest battery storage incentive programs in the United States. Originally created as a response to the state’s 2001 energy crisis, it has since evolved into the innovative battery storage rebate program it is today.
The goal of SGIP is to reduce greenhouse gas emissions and increase the amount of available clean energy in California by incentivizing clean energy technologies.
On this page:
- What is SGIP?
- How does SGIP work?
- How much can you save?
- Who is eligible?
- SGIP incentive rates
- SGIP current status
- Future of SGIP
Tesla’s commercial battery storage system, Powerpack. Image source: Engadget.com
What is SGIP?
SGIP is an incentive program run by the California Public Utilities Commission (CPUC). You can apply for the incentive for various “behind the meter” distributed generation technologies, such as wind turbines, waste-to-heat power, and pressure-reduction turbines.
However, the incentive is mostly used for energy storage systems. In fact, 80% of the program’s budget is allocated for storage.
How does the SGIP battery rebate work?
Senate Bill 700, a bill passed by California’s legislature in 2018, revamped the SGIP program to make it what it is today. The bill also extended the program’s budget by $800 million.
SGIP’s budget is divided between 4 program administrators:
- Pacific Gas and Electric Company (PG&E)
- Southern California Edison (SCE)
- Center for Sustainable Energy (CSE)
- Southern California Gas Company (SoCalGas)
Each of the program administrators receives a different allocation of the total SGIP budget. From there, 80% of each of their budgets is reserved for energy storage, and the remaining 20% is designated for other distributed generation technologies, like fuel cells and wind turbines.
The energy storage portion of each SGIP budget has a developer cap, which prevents one battery developer from establishing a monopoly in California’s energy storage market.
Each Program Administrator has their budget divided into 5 steps, each with a different budget allocation and incentive rate. Once the budget allocation is reached, the program moves into the next incentive step with a lower rate.
Once a program reaches Step 3, each of their respective equity budgets, which fund low-income projects, will be opened.
How much can you save on a battery storage system with SGIP?
Making the decision to install a battery storage system on your home can be an expensive investment. SGIP can soften the blow of the upfront installation costs and make installing battery storage a more affordable option.
In fact, the SGIP rebate amount will cover about one-third of the costs!
Tesla’s Powerwall battery system is one of the most popular energy storage systems on the market. Powerwall is a battery that can be used to store the energy produced by a solar panel system.
Is the Tesla Powerwall eligible for SGIP?
Yes, homeowners who install Powerwall can apply to receive a rebate from SGIP.
The residential storage SGIP programs are currently in Step 5, so applicants will receive $0.25 per watt-hour of energy their battery system holds. One Tesla Powerwall battery has a capacity of 13.5 kWh.
So, using the Step 5 incentive rate, a Powerwall system would be eligible for a rebate of $3,375.
A Tesla Powerwall system, including installation and supporting hardware costs, will cost around $10,100.
Because the SGIP rebate covers about one-third of the costs, the total cost to install Powerwall would drop to $6,725, after the rebate.
The cost could be even lower if you take advantage of the federal investment tax credit (ITC).
Who can take advantage of the SGIP rebate?
In order to qualify for SGIP, applicants must either be a commercial, industrial, agricultural or residential customer of PG&E, SCE, SoCalGas, or San Diego Gas and Electric (SDG&E).
The SGIP rebate for battery storage is separated into 5 categories:
- Large-scale storage systems
- Residential storage systems
- Residential equity systems
- Residential equity resiliency systems
- Non-residential equity systems
Large-scale storage systems
Large-scale storage systems are bigger than 10 kilowatts (kW) in size. It is important to note that if you are installing a large-scale battery system and taking advantage of the federal investment tax credit, you will receive a lower incentive rate.
Residential storage systems
If you are considering installing a home battery storage system, you can apply for the residential SGIP incentive. The system installed must be on a residential property and must be 10 kW or less in size.
Using the federal tax credit does not impact the residential incentive rate.
Residential equity systems
If you are a low-income customer in a multi-family or single-family home, you may qualify for the residential equity incentive. The incentive level for the equity budget remains the same, regardless of what step the program is in.
Also, the SGIP developer cap does not apply for equity systems. You can check the SGIP handbook to see if you qualify as a low-income home or are determined to live in a disadvantaged area.
Residential equity resiliency systems
A recent ruling opened up a new SGIP category - the equity resiliency budget. To qualify for the equity resilience budget, you must meet the following criteria:
- Be eligible for the residential equity budget
- Be located in a Tier 3 or Tier 4 fire threat district and/or
- Have experienced two or more Public Safety Power Shutoffs (PSPS) at the time of application
The incentive amounts for residential equity resiliency systems are designed to cover close to 100% of energy storage installation costs. The incentive level for the equity resiliency budget remains the same, regardless of what step the program is in.
The developer cap does not apply to equity resiliency systems.
Non-residential equity systems
Non-residential equity projects must be installed at local or state government agencies, educational institutions, non-profits, or small businesses. Additionally, the site must be in a disadvantaged or low income community. Non-residential equity projects do not have a developer cap.
|System Type||Step 1||Step 2||Step 3||Step 4||Step 5|
|Large-scale storage (>10 kW)||$0.50 / Wh||$0.40 / Wh||$0.35 / Wh||$0.30 / Wh||$0.25 / Wh|
|Large-scale storage (>10 kW) with ITC||$0.36 / Wh||$0.29 / Wh||$0.25 / Wh||$0.22 / Wh||$0.18 / Wh|
|Residential storage (≤10 kW)||$0.50 / Wh||$0.40 / Wh||$0.35 / Wh||$0.30 / Wh||$0.25 / Wh|
|Residential equity storage (≤10 kW)||N/A||N/A||$0.85 / Wh||$0.85 / Wh||$0.85 / Wh|
|Residential equity resiliency storage (≤10 kW)||N/A||N/A||$1.00 / Wh||$1.00 / Wh||$1.00 / Wh|
Minimum discharge requirements
“Discharging” means using all of the power in the battery. In order to qualify for the rebate, all large-scale systems must discharge a minimum of 130 full discharges per year - meaning they must use all of the energy stored within the battery a minimum of 130 times. Residential systems are required to discharge a minimum of 52 times per year.
It is important to note that because of the minimum discharge requirements, battery systems that are installed exclusively for the purpose of backup energy storage, like for use during a power outage, are not eligible for SGIP.
What is the current status of SGIP?
SGIP is a popular incentive program - especially for residential projects. For all four program administrators, the residential storage program is in Step 5, with CSE and PG&E currently offering a waitlist.
Large-scale storage programs are in Step 3 across the board, except for PG&E, which is still in Step 2. Residential equity programs are all in Step 5, while non-residential equity programs are all in Step 3.
Both residential and non-residential equity programs are in Step 3 under all program administrators.
You can keep track of each step the incentive is on through the SGIP Program Metrics Dashboard.
What is the future of SGIP?
Thanks to SGIP, California has gained an additional 85 megawatts of energy storage projects. The large-scale programs and each of the equity programs still have plenty of funds remaining.
As programs begin to reach the end of Step 5, a waitlist will be established. If funds become available, the waitlisted projects will be reviewed by program administrators.
The popularity of the residential storage program has brought all of the programs into their final step with two of the program administrators, PG&E and CSE, starting waitlists.
Program administrators will accept applications until all incentive funds have been paid or until December 31, 2020 - whichever comes first.
Author: Catherine Lane | SolarReviews Blog Author
Catherine is a researcher and content specialist at SolarReviews. She has strong interests in issues related to climate and sustainability which led her to pursue a degree in environmental science at Ramapo College of New Jersey.