California Supercharges Battery Incentive for Wildfire-Vulnerable Homes

California has passed its first-ever subsidy aimed specifically
at bringing more distributed solar and energy storage to people at
highest risk of having their power shut off by utilities trying to
prevent wildfires. 

The California Public Utilities Commission approved changes
(PDF)
late last week to the Self-Generation Incentive Program, the
state’s premiere behind-the-meter
battery incentive
 program. Among them is a
$100 million carveout
for vulnerable households and critical
services in Tier 2 and Tier 3 “high fire threat districts,”
offering incentives that could pay for nearly all of a typical
residential battery installation, according to the CPUC
analysis. 

This supercharged incentive is aimed specifically at people at
the highest risk of being hurt if, or when, grid power is cut off
for hours or even days at a time, under the state’s
heightened wildfire
prevention regime
. While utilities have been sparing in their
use of this new public safety power shutoff (PSPS) authority so far
this summer, they are largely at the mercy of the weather to
determine how often they’ll be forced to use it in the future, or
how many customers might be affected. 

Climate change is driving hotter and drier conditions, putting
large swaths of the state at high risk of catastrophic wildfires,
including those caused by utility power lines. Pacific Gas &
Electric’s bankruptcy was
driven by its liabilities from wildfires in 2017 and 2018 caused by
its power lines, and Southern California Edison and San Diego Gas
& Electric have faced credit downgrades and the threat of
insolvency if they’re hit with blame for a major fire. 

State regulators and lawmakers have responded to the crisis with
steps including a $21
billion wildfire fund
 for utilities, as well as mandates
to invest
billions in grid repairs
, tree trimming, weather forecasting,
and other wildfire prevention efforts. Thursday’s decision marks
the first time the CPUC has approved one of the several proposals
from utilities and distributed energy resources (DER) vendors such
as
Sunrun
to put market-based incentives to work on the same
task. 

The funding will come from SGIP’s equity budget, a set-aside
for low-income, medically compromised or otherwise disadvantaged
residents. Utilities and solar-storage vendors have struggled to
enroll many of these customers in what’s still an expensive
solar-storage proposition, leaving large portions of the equity
budget unspent.  

The regulator’s decision addresses many of challenges on this
front, such as opening SGIP funding to specific Central Valley
disadvantaged communities and participants in existing multi-family
housing solar programs. It also boosts the current cap of 50 cents
per watt-hour for battery installations, already higher than the
mainstream incentive, to 85 cents per watt-hour. 

Higher premium

The $100 million carveout would apply an even higher premium to
systems meant to bolster grid resilience against wildfires, up to
$1 per watt-hour. “This will address the primary barrier to
participation in SGIP by equity budget-eligible customers,
particularly residential customers, which is lack of access to
financing or capital,” the CPUC noted. 

Indeed, at $1 per watt-hour, SGIP pays for $13,200, or 98
percent, of the cost of the prototypical Tesla Powerwall
residential battery system used as the CPUC’s reference case,
compared to $6,600 or 50 percent at 50 cents per watt-hour, or
$11,200, or 83 percent, at 85 cents per watt-hour.

“Party comments on the proposed decision persuaded us that the
risk of setting the incentive levels too low for the new equity
resiliency budget and the equity budget, leading again to no or
very low participation in these budgets, outweighs the risk that
developers will inflate costs,” the CPUC wrote. 

Not everyone living in Tier 2 or 3 areas will be eligible for
this funding, only “SGIP critical resiliency needs” customers.
With a few exceptions, this means people who meet the equity
budget’s low-income and disadvantaged criteria, or are “medical
baseline” customers who have notified their utility of “serious
illness or condition that could become life-threatening if
electricity is disconnected.” 

Critical services and critical infrastructure in Tier 2 and 3
districts can also apply for the carveout, although CPUC’s
decision makes clear it will prioritize “only the most critical
facilities and infrastructure and those with the least ability to
fund a storage system.” 

The CPUC also set up new rules for critical resilience
customers, who are meant to use their batteries to “island,” or
run disconnected, from the grid, to deal with the fact that
the SGIP program wasn’t designed for islanding. These include
requirements to have the system inspected by the local utility or
another authority with jurisdiction over its interconnection, and
to file data on how long it can operate in island mode under
different conditions. 

Beyond the $100 million wildfire carveout, the decision makes
some important changes to SGIP’s approach to low-income,
disadvantaged and multi-family housing, the CPUC’s press release
noted. Those include granting eligibility to participants in the
Single Family Affordable Solar Homes (SASH) program, the SASH for
Disadvantaged Communities program (DAC-SASH), the Solar on
Multifamily Affordable Housing (SOMAH) program, and the Multifamily
Affordable Solar Housing (MASH) program. 

The CPUC also approved $4 million for heat pump water
incentives, and $10 million for Self-Generation Incentive Program
storage incentives to support pilot projects in 11 San Joaquin
Valley disadvantaged communities. 

Source: FS – GreenTech Media
California Supercharges Battery Incentive for Wildfire-Vulnerable Homes