California

New Subsidies in California for Energy Storage

California is no stranger to subsidizing renewable energy – and now, there is a newer and bigger subsidy that has just been approved, this time attempting to invigorate the energy storage market.

California’s Self-Generation Incentive Program (SGIP) has been a major success in the past years. The subsidy that was geared towards incentivizing the growth of solar energy proved fruitful. Despite the program’s flaws, reforms have been proposed to help gear the subsidies towards energy storage, which is an essential component to growing the renewables space. For instance, in the past a proposal made it so that 75% of funds would be reserved for energy storage projects.

New initiatives, however, are what led some to believe the subsidy program will spark growth in storage solutions. Chiefly, the funds collected from rate payers will double to $166 million per year through 2019. Moreover, 85% of the additional funds raised will be allocated to energy storage, as opposed to the aforementioned 75%. Fifteen percent of the funds will be reserved for renewable projects.

The success of the SGIP program in commercializing solar and fuel cell tech leads the commission which heads the program to believe that they can also stimulate the commercialization of storage.

However, how to best distribute the new funds efficiently is still up for debate. Stakeholders have been vocal in offering opinions.

To a certain degree, the new program will pit standalone energy storage firms against independent solar installers in the fight to be subsidized. If a program is oversubscribed to receive subsidies, the project would become registered in a lottery system. This system includes preferences with regards to location. It also gives storage-plus-solar preference over storage-only projects.

Unsurprisingly, the standalone energy storage firms were upset at this addition. Several have come out and decried the prioritization of storage-plus-solar. They argue that it is in the best interest of ratepayers and customers to prioritize those projects which offer the grid the most benefits, in order to maximize the effectiveness of collected funds.

Rather than storage-plus-solar receiving priority, the standalone firms believe they should get priority.

However, the other side of the debate argues that storage-plus-solar does indeed provide grid benefits.

Their arguments is that the consistent addition of solar to grid will result in more and more negative price events. By pairing solar technology with batteries, solar becomes more accessible – consumers are more likely to participate in the solar trend. This is a benefit for the grid, and is a benefit for solar installers.

General Capital commented on the new program, saying that the falling costs of energy storage solutions coupled with incentives from the federal tax credit are conditions that will lead to a boom in solar-plus-storage. They predict it will become a standard offer for commercial and industrial customers alike.

The firm, however, also addressed the incentive level offered to those who chose to partake in solar-plus-storage projects. Commercial storage deals will be offered 50 cents per watt hour. This is an extremely generous offer – offers are typically presented per kilowatt hour (1,000 watts).

This offer makes it so much more attractive for consumers to opt for a solar solution that includes battery storage. The fact is, consumers already want solar to save themselves from the growing cost of electricity. By choosing a storage-plus-solar system, they are getting what they want, and the government is paying for it.