How California Facilities Can Get Paid for Avoiding Power Outages

Amid wildfires, extreme heat, and rolling blackouts, the state’s SGIP Resiliency program offers financial relief

After three straight years where both wildfires and fire-preventive power shutoffs brought disastrous consequences for Californians, 2020 may prove to be the worst yet. As I write this, more than 600 wildfires, including two of its largest ever, now burn across the state. A “red flag” warning of extreme fire risk extends across the San Francisco Bay Area and down through the Central Coast. And fire season still has two more months to go.

As the state arguably most impacted by COVID-19, California already faced significant challenges before fire season even began. But for those who are particularly concerned about power outages and interested in long-term solutions to both blackouts and rising energy costs, there’s actually never been a better time to consider the benefits of on-site energy storage.

California leads the nation in rewarding organizations for installing on-site backup power projects that, because they relieve stress from the grid, enhance the stability of the broader electricity system. This quality, which California calls “resiliency” – the ability to withstand and recover rapidly from disruptions – will be increasingly important in a world more heavily impacted by climate change and extreme weather.

The relevant state program – the “Self-Generation Incentive Program,” or SGIP, administered by the California Public Utilities Commission (CPUC) – has in recent years overwhelmingly supported energy storage, and for good reason: it’s clean and reliable, and it can provide backup power by itself or for longer periods when paired with solar. Storage is a great economic choice as well: beyond avoiding costly interruptions, it saves organizations money on energy bills year-round.

Facing ever-greater wildfire risks, California has dramatically ramped up SGIP in recent years, with the CPUC authorizing more than $1 billion in SGIP funding through 2024. Typically SGIP incentives cover half or more of the installation costs of a qualifying on-site energy storage system (ESS) for commercial and industrial customers. But customers who qualify for the “SGIP Resiliency” program can increase their incentive payout by up to 3X.

Facilities can qualify for the SGIP Resiliency incentive by meeting two criteria. The first criteria, “Critical Facilities,” is broad and encompasses all of the following:

1. Emergency responders including police stations, fire stations, emergency operations centers, 911 call centers
2. Medical facilities including hospitals, skilled nursing facilities, nursing homes, blood banks, health care facilities, dialysis centers and hospice facilities
3. Gas, electric, water, wastewater or flood control facilities
4. Jails and prisons
5. Locations designated by investor-owned utilities (IOUs) to provide assistance during Public Safety Power Shutoff (PSPS) events, including cooling centers
6. Homeless shelters
7. Food banks

The second criteria is location-based: facilities must be located in a “High Fire Threat District” or have been affected by at least two PSPS events. As you can see from this map, that includes more than half of the land area in the state of California.

While SGIP’s Resiliency program will undoubtedly catalyze much-needed investment, the application process can be challenging to navigate. It can also be difficult to design effective backup power systems that meet both organizational needs and SGIP program requirements – anything from standalone ESS to complex solar + storage microgrids.

But with historic wildfires and extreme heat, California’s first rolling blackouts in nearly 20 years, and possibly a decade of PSPS events ahead, now is the time to protect your facility from power outages.

If you’re an end-use customer or solar developer who’s interested in capitalizing on California’s Resiliency incentives, contact Stem today. As a longtime storage pioneer in California and the state’s largest C&I storage installer by a wide margin, our experts would be happy to answer your questions, help you determine which incentives you qualify for, and design an ESS that works for you.

In the meantime, stay safe, healthy, and strong. These are extraordinary times – but we’ll get through them!