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  • Writer's pictureCorey L. Wilson

California’s Self-Generation Incentive Program (SGIP)

Updated: Nov 28

The Self-Generation Incentive Program (SGIP) offers financial incentives for distributed

energy resource (DER) systems installed behind the customer meter (BTM) in California.

The California Public Utilities Commission (CPUC) opened SGIP in 2001, originally

incentivizing solar, biomass generation, and other on-site power sources. Today solar no

longer qualifies, and the program has largely refocused on energy storage. To date, the

SGIP has contributed to 336 MW of BTM energy storage in California—and it is slated to

contribute more.

On September 27, 2018, California Governor Jerry Brown signed Senate Bill 700, which extends the administration of SGIP through 2025 and supplies an additional $830 million in incentives for qualifying BTM technologies. With the federal investment tax credit (ITC) for various DER technologies set to decline starting in 2020, those interested in energy storage and other DER projects in California would be wise to familiarize themselves with SGIP.

SGIP Program Overview

Since 2001, the SGIP has evolved significantly. As noted, it no longer supports solar photovoltaic technologies, which were moved under the purview of the California Solar Initiative after its launch in 2006. It has also been modified to include energy storage technologies, to support larger projects, and to provide an additional 20% bonus for California-supplied products.

SGIP was significantly modified by D.16-06-055 to reflect changing conditions and priorities with respect to the program. The changes made by D.16-06-055 include the allocation of 75% of the incentive budget to energy storage projects, capping each technology developer to no more of 20% each of the incentives for large-scale energy storage, residential energy storage and generation, the creation of a step system for incentives and the creation of a lottery system for allocating incentives to projects when a given step is oversubscribed.

Incentive Structure

California's SGIP offers incentives to energy storage systems based on several factors, including the kilowatt-hour (kWh) capacity of the system. The incentive amount offered to new storage customers will decline over time as the market matures to ensure efficient use of these ratepayer-funded incentives. Each incentive level is known as a “step,” and a certain amount of money is reserved for each step. On a statewide basis, approximately $40 million has been reserved for energy storage systems in each step.

The stated purpose of SGIP has changed since the program’s inception in 2001. The

program was created as a peak-load reduction program in response to the California

energy crisis. In 2009, Senate Bill 412 shifted the program’s goal to greenhouse gas

reductions. Further changes were made to SGIP in 2016 when the first-come, first-served

awards system was modified to include a lottery process, and a majority of its funds were

carved out for energy storage projects.

To learn more about a SGIP for your energy savings program or see how much your facility can save by taking advantage of a smart energy savings system (SESS), please visit CLW Enterprises at for more information and a free energy savings assessment.

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