What is California’s Self-Generation Incentive Program (SGIP)?

SGIP California Program

Homeowners considering installing a home battery have been excited by a California’s new SGIP incentive program, and for good reason. As one of the best incentives in the country, the program now offers a rebate for battery storage across California with a specific focus on increasing residential installations. Now, recent changes to the Self-Generation Incentive Program (SGIP) have made it easier for homeowners to access and benefit from the program.

California SGIP rebate program and energy savings

The California energy storage rebate program, otherwise referred to as the Self-Generation Incentive Program (SGIP), dates back to 2001. SGIP supports a number of “behind the meter” technologies that can be installed at residential or commercial properties, including energy storage, fuel cells, and combined heat and power generators.

Recently, the state of California announced an overhaul of the program, which is great news for homeowners with energy storage in California. The changes will lead to major incentive increases for installing CA home batteries.

One of the biggest and most important changes comes for homeowners who are customers of either PG&E, SCE, or SDG&E as they become eligible for an incentive as high as $500 per kilowatt-hour (kWh) when installing a home battery. That’s enough to cover most, if not all, of residential homeowners’ costs. The value of the per-kWh incentive is related to the size of the battery and will be further reduced as more batteries are installed in the Golden State. This means the earliest adopters will be able to secure the biggest incentives.

How much money can a Tesla Powerwall save with SGIP?

The second-generation Tesla Powerwall has a 13.5 kWh capacity, making it eligible for a $500/kWh incentive for a total of $6,750. The list price for the Powerwall is $5,500, and Tesla gives an estimate for installation and supporting hardware at an additional $1,700. This brings the total price to $7,200. When you subtract the $6,750 incentive, you’re left with just $450 of your battery costs that you need to cover out of your own pocket.

$5,500 (list price) + $1,700 (installation) =
$7,200 total cost

13.5 kWh * $500/kWh incentive =
$6,750 rebate

$7,200 cost – $6,750 rebate =
$450 net price

The second advantage of the SGIP incentive is that 79% of the program’s funds (equal to more than $62 million annually) are intended specifically for energy storage. In previous years more of the funds were used for fuel cells and other forms of energy production. 13% of the energy storage funds are also allocated specifically for residential applications to permit homeowners who want to install batteries with their solar panels to do so.

Lastly, instead of being released all at once, funds will be made available in the course of the entire year in a serious of submission rounds. Making the program continuous is more in line with how other incentive programs are structured, especially for solar power. This way, solar-plus-storage installers can give homeowners better estimates on how much of a rebate is available to them before installing the system. Until recently, the application process for a home battery rebate through SGIP was difficult, especially for residential customers. Program funds became available on a specific day with the majority being taken very quickly by industrial-sized energy storage projects. This left virtually nothing for homeowners interested in small home batteries. Now, applications will be accepted throughout the year, which gives residential owners more flexibility and freedom.

Why should you consider a California home battery rebate?

Home energy storage has many advantages, particularly if you have a solar panel system installed on your roof. A home battery allows for the storage of excess solar power at home in addition to net metering excess energy.  Feeding excess power into the electric grid has its benefits as it’s an easy way to balance out daily electricity production and use, and adding in a battery allows homeowners to further optimize their energy production and consumption. Under California’s original net metering policy, homeowners are entitled to bill credits equal to the price they pay for electricity for every kWh of extra solar power sent back onto the grid. There will be a few changes to net metering that will make a battery more valuable for homeowners as announced under the new directive.

In early 2016, California approved net metering 2.0, which requires all new solar homeowners to switch to time-of-use (TOU) rates. In summer 2016, San Diego Gas & Electric became the first CA utility to start implementing the new net metering 2.0. Homeowners with TOU rates for their electricity will find that the cost of one kWh (and the value of every kWh sent back to the grid) varies depending on the time of day. Installing a home battery with your solar panel system allows you to store excess solar power at home when utility rates are low and use it when rates are at their highest.

There are several benefits in installing a home battery include having backup power in the event that the electric grid goes down. Given that most batteries for home use can store a few hours of electricity, they provide an adequate supply of energy as a backup source in the event of a power outage. Another benefit of solar panels is that they offer a clean, renewable source of power and add considerable value to your property. The home battery and panels typically pay for themselves in 5-7 years, and then you’ll be enjoying close to free electricity for the entire 25+ year life of your system.

Shopping around for solar-plus-storage in CA

California is quickly becoming a leader in sustainability and these incentives for home energy storage are proof of this. The SGIP program allows homeowners in Golden State to install a battery as part of their home solar system with little to no additional cost. All potential SGIP savings coupled with the 30% federal investment tax credit (ITC) essentially mean that you could cut your solar-plus-storage costs in half.

If you’re interested in a solar investment, you need to understand the market in your area. PowerScout’s Solar Calculator is a good starting point for estimates on what homeowners in your area are paying for their systems, expected savings, and how long it takes to break even on your solar investment. Be sure to compare several quotes, read reviews on pre-vetted solar installers local to you, and explore multiple solar offers before making a choice for your home.