California's plan to equip vulnerable citizens with batteries to keep the lights on during the upcoming fire season has gotten bogged down by bureaucracy, and the coronavirus pandemic is making things worse.

In a landmark move, California regulators last year redirected the Self-Generation Incentive Program (SGIP), the state’s main support mechanism for behind-the-meter batteries, to focus more than half of its $1.2 billion budget through 2024 on providing backup power to protect its most vulnerable populations. The state's recent wildfires, and the intentional grid shutdowns meant to prevent more of them, have left millions in California without electricity, sometimes for days on end.

But these well-intentioned changes, designed to completely cover the cost of battery installations for low-income or medically vulnerable residents in the highest fire-threat regions, have had a rocky rollout. The program has been plagued by delays in implementation and ongoing confusion over its new rules, solar and energy storage industry members say. 

Now, on the eve of opening a delayed application process for the program, energy storage companies say they are still struggling to find and enroll eligible customers and install systems that will be ready for what might be an even more dangerous wildfire season than last year.

“We’ve been developing a pipeline of customers since September,” Ted Ko, vice president of policy and regulatory affairs for non-residential energy storage provider Stem, told GTM. “But the eligibility rules for equity and resilience have not been completely clear.” 

The redesigned program now offers an incentive of $1 per watt-hour for customers that fall under its new “equity-resilience” category. That's high enough to cover the upfront cost of almost any battery system on the market, and that pot of money contains $613 million — a huge slug of potential investment into California's on-site storage market.

But that level of incentive is only available for a select group of customers: those who both live in high-risk areas for blackouts and fires and who also qualify as low-income or disadvantaged. 

While the goal of helping such communities acquire batteries for resilience is a laudable one, it’s “defined in such a way that very few customers are eligible for it,” Ko said.

The $1 incentive is far more generous than what's available to other potential storage customers. Most homes and businesses are eligible for 35 cents per watt-hour under the SGIP program, while low-income and disadvantaged communities not at high risk of blackouts can get 85 cents per watt-hour.

The challenge of finding eligible customers

Anne Hoskins, chief policy officer of residential solar-storage installer Sunrun, said it’s been hard to find customers who qualify for the highest incentives.

Part of the problem is simply getting information on potential customers, she said. The California utilities in charge of processing SGIP applications and paying out incentives can’t identify low-income customers or “medical baseline” customers who need electricity to run life-support equipment without violating their privacy.

The CPUC now provides maps of its high fire-threat districts and has shifted to using census tracts to designate customers that qualify for its equity incentives. But the regulator still hasn’t developed online tools that vendors can use to certify that a customer’s address qualifies for one incentive or another, said Melicia Charles, Sunrun’s director of public policy. 

“The challenge for us is, we want as much information as possible so we can target the market as surgically as possible," Charles said.

Sunrun has been working with groups representing vulnerable populations, such as Oakland-based Grid Alternatives, to fill in these gaps, she said. And online tools have been developed in the absence of an official CPUC version, including maps provided by utility Southern California Edison, trade group California Solar and Storage Association, and building energy data provider Station A.  

SGIP’s equity budget, which can serve low-income and disadvantaged communities that don’t meet CPUC’s definition of being threatened by fires or power outages, offers relatively high incentives of 85 cents per watt-hour. But the budgets for these programs are relatively small, at $53 million for non-residential and $32 million for residential applicants, which means “a lot of people are going to go after that, and it’s likely to be oversubscribed,” Ko said.

Meanwhile, SGIP’s general market categories have relatively large budgets remaining, with $60 million for residential and $298 million for large-scale storage. But as Ko pointed out, much of the large-scale storage budget comes from money unspent from previous years.

"The incentive wasn’t high enough,” he said, and those incentives remain unchanged. 

A Stem 1.25 MWh battery system installed at a school in Southern California. (Credit: Stem)

To be sure, storage vendors have reasons to prefer SGIP incentives that apply to broader groups of customers than those targeted by the CPUC’s narrow definitions, since more easily accessed incentives help to boost sales. But the 2018 law that expanded SGIP funding through 2024 didn't contemplate the pot of funding being redirected in ways that could limit its rollout, Ko said. 

“We would have liked to see more money available in the general pool of funds,” Sunrun’s Hoskins said. “We think everyone could benefit by having more batteries out there to increase overall resiliency and move us toward more distributed systems."

Coronavirus pandemic adds delays and challenges  

All of these challenges have been compounded by the coronavirus pandemic, which has prevented vendors from meeting in person with potential customers, delayed site inspections, and led to delays in the CPUC’s process for resolving problems that have emerged in the rollout of its newly complicated program. 

The first problems began after the March 1 opening date for SGIP residential equity and resilience applications, which was meant to provide ample time for applications to be processed and installations to be done before the start of the 2020 fire season. But in late March, after the state’s COVID-19 stay-at-home and work restrictions had been enacted, the CPUC’s Energy Division put a pause on accepting new applications, citing screening errors in the database used to collect them. 

That forced the CPUC and utilities to halt taking residential applications in early April, and push the date for reopening them to May 1, Poloi Lin, product management advisor for Southern California Edison, said. “Just within that month, we received about 59 equity-resilience applications in SCE territory, just for residential,” she said. 

The CPUC also approved the utilities' request to delay the planned April 1 opening for applications from non-residential customers until May 12. That category includes community centers, schools, hospitals, nursing homes and other key sites for protecting people during wildfires or blackouts.

"We’re coming up on the launch of the program, and we don’t have dependable tools to help us know who can qualify,” Stem’s Ko said.

The delays in opening SGIP applications have also pushed back utility outreach to residential customers.

“Once we get approval on our marketing plan, and start doing direct email and direct mail to these specific customers that most likely will qualify, that will hopefully help,” SCE’s Poloi said. The utility is working with its nonresidential customers to determine “which critical facilities would fall into those [disadvantaged communities] and low-income and wildfire areas that could potentially take part in the $1 incentive program.” 

That’s going to be a critical step to boost customer awareness, Sunrun’s Hoskins said. “We don’t have ratepayer funds to pay for that kind of outreach.”

At the same time, the delays have given utilities and vendors time to work on a “virtual inspection” process that would allow customers and vendors to take photos and videos to replace visual inspections by utility employees who can’t enter homes under COVID-19 restrictions. 

"All our sales are now virtual," Sunrun's Hoskins said, adding, "We've been talking to policymakers about the importance" of expanding their use for programs like SGIP. Stem and SCE have already used virtual inspections for commercial projects for the past year, Ko said. But the CPUC and utilities are still working on how that will work once projects begin getting approved. 

Running out of time

The SGIP program is among California's only current efforts to bring wildfire and blackout resilience to residents this year, Sunrun's Hoskins noted. Efforts by the CPUC to fast-track utility microgrid development faltered earlier this year after SCE and PG&E were unable to propose cost-effective projects that could be completed in 2020.  

“We’re approaching wildfire season again," she said. “There really is nothing else prepared, beyond utilities reinforcing their systems, at great expense. Batteries offer the potential to have some backup — clean backup, without having to run out and buy fossil-fueled generators.”