Update From The Field May 2017:
California’s Self Generation Incentive Program: a huge push for the Californian energy storage ecosystem

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Executive Summary

This month’s Update From The Field proves that the US market remains the most dynamic one for energy storage. Indeed, be it for interesting regulatory changes, number of projects or event justifying a very long and detailed focus of the month, the USA are present in all parts of this month’s report. With California of course, considering that an additional 80 MW has been procured there, and most importantly, that almost half a billion dollars have been made available to fund Behind-The-Meter energy storage over the next three years.

In Europe, self-consumption goes a step further with new feed in tariffs allowing to self-consume electricity and inject the surplus into the grid in France and a draft law published in Germany to encourage the offtake of residential storage systems for home tenants.

This May, the Self Generation Incentive Program is re-opening in California and is specially oriented to support energy storage systems behind the meter. The understanding of this incentive and the deriving business models are analyzed in the focus of the month.
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Table of Contents
Executive Summary 2
Table of figures 5
New regulations and initiatives discussed this month 6
Americas 6
The changes in the PJM frequency regulation market triggered the wrath of the US energy storage sector 6
California keeps encouraging energy storage installations by providing generous incentives 7
Nevada has introduced a bill that could lead to the creation of a new energy storage mandate 7
Europe 8
The French regulator introduces a new methodology for assessing the value of energy storage systems in the islands 8
The French government allows “collective self-consumption” and includes the possibility that consumers share storage assets. 10
The British regulator is fine tuning the market participation rules of storage to the capacity market 10
The Italian regulator is preparing the liberalization of the Ancillary Services market by mandating Terna to create a demonstration project 11
The German government publishes a draft law that creates a scheme in which landlords can sell energy to their tenants 12
Asia / Oceania 13
The state of Victoria in Australia creates an energy storage initiative which includes a 40 MW tender 13
Projects updates and announcements 13
Overview of the 2017 market for utility-scale projects: Large procurements in California are dominating the market, but small announcements indicate dynamic markets 13
Projects commissioned this month 14
Projects announced this month 14
Focus of the month – California’s Self Generation Incentive Program: a huge push for the Californian energy storage ecosystem 16
Introduction 16
Over the years, storage has become the key target of the SGIP 17
The rise of storage 18
Bidding process and incentives offered under the current version of the SGIP 19
SGIP Step 1 preliminary results and outlook 20
Bidding actors, priorities, and local encouragement 21
SGIP energy storage incentive details 22
Analysis of Business model (battery use and implementation) 24
Large-scale energy storage systems usually benefit from the diminution of the demand charge 24

Table of figures

Figure 1: Types of frequency regulation signals available on PJM 6
Figure 2: Energy storage potential in dispatchable capacity for decreased cost of electricity 9
Figure 3: De-rated factors for the 2016 capacity market auction 11
Figure 4: Overview of the storage volume commissioned and announced for 2017 to date 14
Figure 5: Overview of the procurements made by the three Californian IOUs 16
Figure 6: Repartition of the 2017-2019 SGIP incentive funds 17
Figure 7: Total SGIP funding dedicated to Energy Storage in 2009 – 2019 18
Figure 8: Energy storage capacity percent of total SGIP capacity 19
Figure 9: SGIP total funding (repartitioned in 5 steps) for 2017 – 2019 20
Figure 10: Energy storage incentive rates for each Step of the SGIP 22
Figure 11: Energy storage incentive based on energy capacity and duration 23