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California Self-Generation Incentive Program on Verge of Five Year Extension

It has been a busy week for California State legislators on the clean energy front. Following closely on the heels of the California Senate’s approval of SB 100, the California Senate on Thursday by a vote of 25-13 passed SB 700, a bill that according to the California Solar and Storage Association (CALSSA) could result in an additional 3 GW of behind-the-meter energy storage systems in California by 2026. The bill, which has been the subject of intense lobbying by CALSSA and other solar industry advocates, also passed the California Assembly on Wednesday by a vote of 57-18. It now will be forwarded along to Governor Jerry Brown’s desk for consideration, where it is widely expected to be signed into law.

SB 700 would extend California’s Self-Generation Incentive Program (SGIP) for an additional five years, from the current January 1, 2021 expiration date until January 1, 2026. SGIP provides rebates for the installation of energy storage systems and certain eligible technologies including wind turbines, pressure reduction turbines, fuel cells, waste heat capture and combined heat and power, internal combustion engines, microturbines and gas turbines (although the bill provides that after January 1, 2020, nonrenewable generation technologies will not be eligible for rebates under the SGIP). 75% of total rebates under the program are designated for energy storage technologies.

SGIP currently authorizes California regulators to collect up to $166 million per year from the state’s largest investor-owned utilities (IOUs); with the extension of SGIP an additional amount of approximately $800 million will be added to the program. SB 700 provides that its intent is to “increase deployment of distributed generation and energy storage systems to facilitate the integration of those resources into the electrical grid, improve efficiency and reliability of the distribution and transmission system, and reduce emissions of greenhouse gases, peak demand, and ratepayer costs.”

A significant amount of energy storage will likely be required if California is to meet SB 100’s mandate that the State generate 100% of its electricity from carbon free sources by 2045, so SB 700 can be seen as helping to achieve the SB 100 mandate. SB 700 should also provide another shot in the arm to California’s residential solar industry, particularly as new residential solar installations in the State are now subject (under “Net Metering 2.0”) to time-of-use rates which can result in the most highly priced hours for net metering sales by residential customers being in the evening.

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About this Author

Jason N. Barglow, Foley Lardner Law Firm, Los Angeles, Development Permitting Lawyer, alternative energy projects attorney
Partner

Jason Barglow is a partner and real estate and corporate lawyer with Foley & Lardner LLP, and vice chair of the firm’s Real Estate Practice. He is also a member of the Transactional & Securities Practice and the Energy Industry Team. Mr. Barglow’s real estate practice includes advising clients with respect to all types of commercial and residential real estate transactions and issues, including acquisitions, dispositions, land use, construction, lending and finance, development and leasing. His practice also includes advising clients on all manner of real estate...

213-972-4576
Legal, Business, Jeffery Atkin, Foley Lardner, Environmental Attorney
Partner

Jeffery R. Atkin is a partner and business lawyer with Foley & Lardner LLP. His areas of practice cover a broad range of business and financial matters, including renewable energy, project finance, private placements, mergers and acquisitions, joint ventures, real estate development and equipment procurement and leasing. Mr. Atkin is chair of the Solar Energy Team, co-chair of the Energy Industry Team, and a member of the Latin America Practice.

Mr. Atkin’s experience in renewable energy and project finance includes representing developers, investors, lenders and landowners in the construction, development, acquisition and financing of renewable energy generation facilities, including wind, solar, hydro, geothermal and biomass facilities.

213.972.4557
Justus Britt, Solar Energy Project Attorney, Foley Lardner Law Firm
Associate

Justus Britt is a business lawyer and special counsel with Foley & Lardner LLP. Mr. Britt focuses on the development and acquisition of solar energy projects. His project development experience includes advising clients on real estate, permitting, and construction matters, including negotiating supply, EPC, and O&M agreements. Mr. Britt’s acquisition experience includes leading due diligence efforts and assisting on stock and asset purchase agreements, as well as joint venture agreements. He is a member of the firm’s Energy Industry Team and the Transactional...

213.972.4727