Established in 2001by CPUC Decision 01-03-073, pursuant to California AB 970 (Statutes of 2000, Chapter 329), the SGIP is one of the longest running incentive programs in the country and has undergone many changes since its inception. The SGIP was established to provide incentives to businesses and individuals who invest in DG, i.e., generation that is installed on the customer’s side of the meter and provides electricity for a portion or all of a customer’s electric load. Initially, the SGIP provided incentives for solar PV systems, renewable fuel cells, and wind turbines, as well as for non-renewable fuel cells, microturbines, internal combustion engines, and small gas turbines, provided that they utilized waste heat recovery. Incentive payments under the SGIP were initially limited to 1 MW.
With the creation of the CSI program in 2006, CPUC Decision 06-01-024 redirected the portion of the SGIP budget supporting solar PV incentives to the CSI program. Additionally in 2006, California AB 2778 (Statutes of 2006, Chapter 617) amended Public Utilities Code Section 379.6 to limit eligibility for SGIP incentives to qualifying wind and fuel cell technologies, beginning January 1, 2008, through January 1, 2012.
In 2008, CPUC Decision 08-04-049 permitted expansion of SGIP incentive payments beyond the prior 1 MW limit, allowing the SGIP Program Administrators to use carryover funds from prior budget years to pay incentives up to 3 MW during 2008 and 2009. As set forth in Decision 08-04-049, SGIP incentives up to 1 MW are paid at existing rates, incentives over 1 MW and up to 3 MW are paid a lower incentive, and systems may be sized up to 5 MW but are only paid incentives up to 3 MW. Additionally in 2008, CPUC Decision 08-11-044 expanded the list of SGIP-eligible technologies, allowing for advanced energy storage (AES) technologies to receive incentives of $2 per watt when coupled with current SGIP-eligible technologies.
In 2009, CPUC Decision 09-09-048 further expanded SGIP incentive eligibility by allowing SGIP projects that use pipeline delivered biogas as their renewable fuel source to receive renewable (i.e., Level 2) incentives. Also in 2009, CPUC Decision 09-12-047 provided that SGIP projects up to 5 MW may continue to qualify for tiered incentives up to 3 MW, as set forth in CPUC Decision 08-04-049, but allowed for payment from either carryover funds or the current year’s budget. Lastly in 2009, California SB 412 (Statutes of 2009, Chapter 182), again amended Public Utilities Code Section 379.6 to extend administration of the SGIP until January 1, 2016, and define technologies eligible for the SGIP as those distributed energy resources that the CPUC determines, in consultation with CARB, will achieve reductions in GHG emissions.
SGIP’s recent legislative and regulatory developments
The SGIP has recently undergone extensive changes as a result of legislation and subsequent regulatory developments. At the heart of these changes is the implementation of California SB 412 (Statutes of 2009, Chapter 182), which modified the primary purpose of the program from peak load reduction to GHG emissions reductions.
Effective January 1, 2010, SB 412:
- Extended the administration of the SGIP until January 1, 2016;
- Provided for a total annual SGIP budget of $83 million per year for 2010 and 2011;
- Provided that any SGIP funds collected and unallocated on January 1, 2016, are to be returned to ratepayers;
- Defined technologies eligible for the SGIP as those distributed energy resources that the CPUC determines, in consultation with CARB, will achieve reductions in GHG emissions; and
- Directed the CPUC to provide an additional incentive of twenty percent from existing SGIP funds for the installation of eligible DG resources from a California supplier.
On September 8, 2011, the CPUC issued Decision 11-09-015 to modify the SGIP and implement SB 412. Specifically, Decision11-09-015 modifies the eligibility criteria for participation in the SGIP, incentive amounts and payment structures for eligible technologies, metering and warranty requirements, and budget allocation among eligible technologies.
As required by Decision 11-09-015, on October 10, 2011, CCSE, on behalf of the SGIP Program Administrators, filed CCSE Advice Letter 22 / PG&E Advice Letter 3245-G/3923-E / SCE Advice Letter 2637-E / SCG Advice Letter 4286 to propose revisions to the SGIP Handbook to implement Decision 11-09-015, as well as improvements to the Waste Heat Utilization Worksheet, a GHG emission rate testing protocol for electric-only technologies that consume fossil fuels, and guidelines to protect against entities creating different governance structures to be able to achieve more funding than the capped amount under the SGIP.
- Advice Letter
- Attachment A SGIP Handbook 2011
- Attachment B Waste Heat Emission Worksheets
- Attachment C Greenhouse Gas Emission Rate Testing Protocol for Electric-Only Technologies
- Attachment D Governance Structures and Affiliations with other Entities
On November 7, 2011 a second Advice Letter was filed by the SGIP Program Administrators to propose implementation of the hybrid- PBI payment structure and metering and monitoring protocols: Advice Letter 24 / PG&E Advice Letter 3253-G/3940-E / SCE Advice Letter 2651-E / SCG Advice Letter 4292
The first Advice Letter became effective on November 9, 2011. Protest was received for the second Advice Letter, and Program Administrators subsequently filed the following protest reply on December 19, 2011:
Additionally, Program Administrators filed a Supplemental Advice Letter on February 17, 2012 to address the issues identified in the protest:
The Supplemental Advice Letter received protest from the California Energy Storage Alliance (CESA) and the California Clean DG Coalition (CCDC) on March 12, 2012. SGIP Program Administrations subsequently filed the following protest response on March 19, 2012:
On March 22, 2012, the CPUC filed a Disposition Letter approving the second Advice Letter, effectively re-opening the 2011 SGIP Program.
SGIP budget
In addition, to address further funding for the SGIP beyond 2011, California AB 1150 (Statutes of 2011, Chapter 310) was passed by the legislature and signed by the Governor in fall 2011. Effective January 1, 2012, AB 1150:
- Extends the authority of the CPUC to authorize the annual collection of $83 million per year through December 31, 2014;
- Reaffirms that the CPUC shall require the administration of the SGIP until January 1, 2016;
- Reaffirms that any SGIP funds collected and unallocated on January 1, 2016, are to be returned to ratepayers;
- Reaffirms that eligibility for incentives under the SGIP is limited to distributed energy resources that the CPUC, in consultation with CARB, determines will achieve GHG emissions reductions;
- Reaffirms the direction to the CPUC to provide an additional incentive of twenty percent from existing SGIP funds for the installation of eligible DG resources from a California supplier and
- Grants the CPUC the authority, in administering the SGIP, to adjust the amount of incentives and evaluate other public policy interests, including, but not limited to, ratepayers, energy efficiency, peak load reduction, load management, and environmental interests.
On December 15, 2011, the CPUC issued D.11-12-030, adopting an annual budget of $83 million for the SGIP for 2012, 2013, and 2014 and clarifying that collection of carryover funding authorized in past SGIP budgets is separate and not part of collection of the $83 million authorized for SGIP in 2012, 2013 and 2014. Additionally, D.11-12-030 directs the CPUC’s Energy Division to complete a review of SGIP participation, spending patterns, and carryover funding in early 2013.
