The SGIP (Self-Generation Incentive Program) Explained

(Last modified on January 26th, 2022.)

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A battery backup system qualifying for the SGIP (Self Generation Incentive Program).
One of our whole house residential battery backup systems.

How much is the SGIP rebate and how does it work?

The Self-Generation Incentive Program (SGIP) rebate is a tiered rebate applicable to grid-tied battery storage installations. To incentivize backup power solutions and reduce peak load demand on the grid, the state of California launched the SGIP program. Though the program has existed since 2011, the recent boom in residential energy storage has popularized the program.

The SGIP rebate program has a set amount of funds allocated to it, which are then administered to the various utility companies in California as follows:

The funds for each utility provider are then divided into multiple tiers of rebates. As one tier runs out of funds, it is closed and applications are pushed to the next tier down. However, the type of application filed can also play a factor.

There are three types of residential SGIP applications: small residential storage, large residential storage and Equity Resiliency. The size of your battery backup system can affect your rebate amount and how soon your application will be reviewed. You may also qualify for additional Equity Resiliency funding if your installation is located in a high fire zone and you have either a medical baseline rate or a well on your property.

The next tier of the SGIP regular small scale storage funding that’s due to open will be at a rate of $150 per kWh (tier 7). These applications can still be submitted in tier 6 (at a rate of $200 per kWh) if they are in a high fire zone. Large scale residential storage applications are still open in tier 4 at $300 per kWh. The rebate amount for Equity Resiliency applications is currently $900 per kWh. An Equity Resiliency application can be submitted if your installation meets two of the three Equity funding requirements listed above.

The tier your application ends up in depends on how long it takes to submit it, how long it takes SGIP to review it, and how many completed applications are ahead of yours.

There is an application fee of 5% of the requested incentive amount that must be mailed directly to the Program Administrator within 7 days of the project being assigned an incentive step. If it is not received within 7 days, the project may be cancelled. A scanned copy of the application fee must be uploaded for each project.

Because the application is complicated, we outsource the process to a company specializing in SGIP rebate applications for a more expedited process.

Does my battery project qualify?

To qualify for the Self Generation Incentive Program rebate your system must meet the following requirements:

  • System must be grid-tied.
  • System cannot be used only for emergency backup.
  • System must be capable of discharging fully at least once per day.
  • System owner is required to discharge the battery a minimum of 52 full discharges per year, for five years.
  • System must pass the energy storage Field Verification Inspection.
  • Customer must be on an SGIP approved utility rate (for SCE, either TOUD-PRIME, TOUD-5-8PM or TOU-EV-1).

As stated above, SGIP systems are required to fully discharge their batteries 52 times per year (once a week) for five years. The batteries must be discharged during peak hours between the hours of 4pm to 9pm.

To meet this requirement your system can be scheduled to discharge itself over the course of several days (or a week) while maintaining an energy retainer in case of emergencies. This gives owners of lead acid battery systems the flexibility to discharge their batteries over several days, ensuring the system’s longevity. As long as it reaches the equivalent of 100% discharge once per week, the system meets this requirement and also qualifies as not an emergency only system.

SGIP approved systems are subject to audits to make sure owners comply with the above requirements. If a battery system fails to pass inspection, the system has 60 calendar days to be brought up to compliance or the application will be cancelled. More information on these requirements can be found in the SGIP Handbook.

How the SGIP program originated

The Self Generation Incentive Program was designed to alleviate the demand on the utility grid during high demand periods (like during a summer heat wave when many use AC at the same time). To cope with extra high demand, the utilities rely on Peaker Plants that can be found throughout California.

These Peaker Plants run on nuclear, natural gas, diesel, biogas or other energy types. Generally, they are highly polluting and inefficient because they take so much energy to gain inertia. In an effort to reduce the use of these plants, the SGIP program was brought online. Because the program requires the participating battery installations to discharge during peak hours, it will reduce the load on the grid and potentially help mitigate electrical fires caused by utility power lines. This is also why the incentive for customers qualifying for the Equity Resiliency rebate funds are so much higher.

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4 thoughts on “The SGIP (Self-Generation Incentive Program) Explained

  1. My battery installer said I have to discharge my battery to 30% every day for 5 years is that true or can I set it to stop discharge 30% a day leaving it at 70% full

    1. The SGIP requirements state that the battery must be fully discharged 52 times per year, for 5 years. Since lithium batteries do not like to be completely drained, some reserve needs to be set to maintain the equipment’s longevity. We generally don’t recommend setting the reserve below 25%, so if you wish to set it at 70% that is not a problem. You can space out the remaining discharging however you’d like to meet the 100% weekly minimum, whether that’s 15% daily, 25% very other day, etc. If you are doing time of use shifting or energy arbitrage, you may be meeting the weekly minimum without additional programming. Hope this helps.

      1. Do you still get the NEM credits when you discharge the battery to meet the required number of discharges?

        1. Hi Michael, Yes all back flow of energy onto your meter, whether from your battery or from solar will go towards your NEM credits.

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