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Background & History

The Self-Generation Incentive Program (SGIP) was initially conceived as a peak-load reduction program in response to the 2000-01 California Energy Crisis, during which Californians experienced electrical outages throughout the state.

Through Assembly Bill 970, the legislature directed the California Public Utilities Commission (CPUC) to offer financial incentives to electric customers of the major investor-owned utilities to install on-site distributed generation (DG) technologies to offset all or a portion of their energy needs. In 2001, SGIP was established to encourage the development and commercialization of renewable and nonrenewable DG technologies.

technical employee pointing to a dashboard

In 2011, California Senate Bill 412 modified the primary purpose of SGIP from peak load reduction to greenhouse gas (GHG) emissions reductions and subsequently, the CPUC modified the program's incentive eligibility criteria to support technologies that achieve GHG emissions reductions. Eligible technologies include energy storage, wind turbines, pressure reduction turbines, fuel cells, waste heat capture and combined heat and power, internal combustion engines, microturbines and gas turbines.

In 2014, California Senate Bill 861 extended administration of SGIP through 2020. In conjunction with this extension of the program in 2016, the CPUC implemented major program modifications, including a new program structure and incentive rates. The most significant change was the allocation of 75% of the total incentive budget to energy storage technologies.

In 2018, the administration of SGIP was authorized for an additional five years of administration through California Senate Bill 700. The program was modified further by the CPUC to allocate significant funding to customers identified as vulnerable households located in Tier 3 and Tier 2 high fire threat districts, critical services facilities serving those districts, and customers located in those districts that participate in two low-income solar generation programs.

Today, SGIP is recognized as one of the longest running distributed generation incentive programs in the country.

SGIP Legislative and Regulatory History

Generation technology projects are subject to operational, sizing and fuel requirements depending on their usage of renewable, blended or nonrenewable fuels. Blended fuels are defined as a fuel mix containing any amount of fossil fuel. Unlike blended fuel generation, renewable generation is subject to rating and sizing criteria rather than operational requirements.

  • In response to California’s energy crisis, the legislature called for more distributed generation and demand response
  • CPUC Decision 01-03-073 adopted SGIP in response to AB 970
  • Extended SGIP through 2007 and established emissions and efficiency requirements for fossil fuel technologies
  • Established California Solar Initiative and removed solar photovoltaic systems from SGIP effective 1/1/2007
  • Extended SGIP through 2011
  • Limited technologies to only wind and fuel cells effective 1/1/2008
  • Extended SGIP through 2015
  • Defined technologies eligible for the SGIP as those distributed energy resources that the CPUC determined, in consultation with CARB, will achieve reductions in GHG emissions
  • Provided for a total annual SGIP budget of $83 million per year for 2010 and 2011
  • Provided an additional incentive of 20% from existing SGIP funds for the installation of eligible DG resources from a California supplier
  • CPUC Decision 11-09-015 adopted SGIP in response to SB 412
  • The SGIP Program Administrators filed advice letters to implement Decision 11-09-015, as well as to propose revisions to incentive amounts and payment structures, warranty requirements and metering and monitoring protocols
  • Extended SGIP annual collections of $83 million per year through December 31, 2014
  • Granted 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
  • CPUC Decision 11-12-030 adopted SGIP in response to AB 1150
  • Extended SGIP annual collections through December 31, 2019, and extended administration through 2020
  • In response to SB 861, CPUC Decision 14-12-033 set the budget at $83 million per year for years 2015-2019
  • Made slight revisions to Public Utilities Code Section 379.6. Specified that SGIP-eligible technologies must reduce peak demand, or shift demand to off-peak times
  • In accordance with SB 861 and AB 1478, CPUC Decision 16-06-055 implemented major changes to the SGIP, including administration of the program on a continuous basis, new incentive rates, minimum biogas blending requirements and other program modifications. Notably, D.16-06-055 allocated 75% of the budget to energy storage technologies and 25% to generation technologies.  
  • Authorized the CPUC to increase up to double the amount of funds collected for SGIP on an annual basis through 2019
  • In response to AB 1637, CPUC Decision 17-04-017 increased SGIP’s total budget per AB 1637 and allocated additional funding between budget categories and incentive steps. Additionally, it revised incentive amounts for storage projects receiving the federal ITC. Decision 17-10-004 later established an Equity Budget with reallocated funds from the budgets funded through SB 861 and AB 1637. The Equity budgets are intended for qualifying low-income residential customers and non-residential customers located in and service low-income or disadvantaged communities.  
  • Authorizes the CPUC to extend annual collections and program administration for the Self-Generation Incentive Program (SGIP) for five additional years
  • CPUC Decision 19-08-001 established a Greenhouse Gas signal and compliance rules for legacy and new projects submitted under SB 700. The Decision also established PBI for all non-residential projects. Decision 19-09-027 established new rates for the Equity Budget as well as created a new budget category specific to customers with critical resiliency needs, the Equity Resiliency Budget. Additionally, funds were allocated for a future Heat Pump Water Heater Budget.
  • CPUC Decision 20-01-021 implemented the substantial administrative changes to the SGIP pursuant to SB 700. This Decision extended administration of the program for an additional five year, as well as established collections for each budget category. The Decision also contained critical changes to the existing and new budget categories.
  • Decisions 20-05-04120-07-01520-10-017, and 20-10-025 were issued in 2020 to further clarify and refine the new program rules introduced via D. 20-01-021. These updates affected customers qualifying in all budget categories under Medical Baseline, Electric Well Pump, and Indian Country.