CPUC Staff Calls for SGIP Funding Limits

Some natural gas and biogas generation technologies should be excluded from Self Generation Incentive Program funding, according to the California Public Utilities Commission staff.

In a paper issued at the end of last year, Energy Division staff recommends disallowing subsidies for natural gas-fueled electric fuel cells and microturbines. The paper also calls for applicants seeking SGIP funding for other natural gas-fired combined heat and power systems—fuel cell and conventional—to document how their technology meets the program’s greenhouse gas emission limits over ten years.

Energy Division staff’s Proposal to Modify the Self Generation Incentive Program concludes that it’s “expected that in 2020 the total societal costs of fuel cells and natural gas- and directed biogas-fired microturbines will greatly exceed their benefits–fuel cells because of high capital costs, and microturbines because of low operating efficiencies.”

The commission’s Self Generation Incentive Program, created by statute in 2000, provides $83 million in annual subsidies to alternative technologies—storage and generation. It’s aimed at promoting customer installations of existing, new and emerging distributed generation to lower energy demand, greenhouse gases and the production of key air pollutants: sulfur dioxide, nitrogen oxides, and particulate matter.

Staff recommends that onsite biogas be allowed to continue in the program.

It also suggests giving energy storage technologies 75 percent of the funding total and generation technologies 25 percent.

Other changes to the program rebates are proposed. They include having an adder for qualifying biogas technologies, offering $1.20/watt for directed biogas and 90 cents/watt for onsite biogas

Larger rebate decreases—which currently are 5 percent/year for existing technologies and 10 percent annually for emerging technologies—are recommended. They could include: Annual step downs for energy storage at one sixth increments. Thus, a $1.20/watt rebate would drop by 20 cents, reaching a 40 cents/watt rebate in the fifth year. Rebate declines for qualified distributed generation at one-twelfth/year. A $1.20/watt rebate would drop 10 cents each year. Staff pointed out that technologies in the generating category “are more mature, with less expectation of rapid decline in manufacturing costs.”

Also recommended is that no manufacturer be allowed to capture more than 40 percent of the SGIP funds in either of the two funding categories—storage and generation-in a private utility territory.

“Encouraging diversity in the supply chain, whether it is for manufacturers or for installers/developers, promotes market transformation and competition, with accompanying price reductions in the long run.” — Elizabeth McCarthy