California Proposes Beefed-Up Solar and Battery Rebates for Low-Income Households

Low-income households in California may soon have access to one of the best solar and battery incentives in the country and an opportunity to drastically lower their energy costs.

On November 2, the California Public Utilities Commission (CPUC) proposed rules for allocating $280 million for the Self-Generation Incentive Program (SGIP). Historically, this program has been restricted to rebates for battery storage. However, the CPUC proposal would increase the battery incentive and create a solar rebate for eligible low-income households.

Keep in mind, this is only a proposal at this point! A final vote could come as early as March 7 and changes could be made before then. Check back for updates.

New SGIP incentive amounts proposed in 2024

Under the new proposal, the “Residential Equity” SGIP incentive would increase from $850 per kWh of battery storage to $1,100 per kWh of battery storage plus $3.10 per watt of solar. This category would also be renamed “Residential Solar and Storage Equity” to match the new incentives.

So, let’s say you are an eligible low-income household and want to install an 8 kW solar system with 10 kWh of backup battery, here’s how much your SGIP incentives would increase under the new proposal.

That’s a massive difference! And while we hate to throw around the term “free solar,” there may be cases in which the proposed SGIP incentives cover the entire cost of a solar and storage project.

It’s worth noting that this incentive does not apply to roofing costs. However, up to $3,500 can be put toward wiring and panel upgrades and it can cover inverter replacements, if necessary.

Qualifying for new SGIP incentives

So who would qualify for for the expanded incentives? First off, this incentive would be reserved for battery storage projects and solar plus battery storage projects. It does not apply to solar-only projects.

Fortunately, the CPUC proposal would also make it easier to qualify for the Residential Solar and Storage Equity incentive by removing the “resale restriction” criteria and expanding the programs that automatically qualify households.

So, the CPUC proposal expands eligibility requirements and increases the incentive amount. What’s the catch?

There are two things to be aware of.

1) Demand Response Programs

The CPUC proposal would require all SGIP participants to enroll in a “Qualified Demand Response Program” through their utility.

In a demand response program, utility customers are asked to reduce their electricity consumption during high-demand events to reduce stress on the grid. The utility may drastically increase prices during high-demand events and/or pay battery owners to export power onto the grid — it depends on the program.

In California, residential demand response programs include:

• SCE Summer Discount Plan
• SCE Smart Energy Program
• PG&E ART
• PG&E SmartRate
• SDG&E EECC-TOU-DR-P

Demand response programs can help prevent power outages. However, if you’re not careful you could end up paying even higher electricity prices during high-demand events.

2) Enrolling in the Net Billing Tariff (NEM 3.0)

CPUC is also proposing that all future SGIP customers — except those in the Residential Solar and Storage Equity group — enroll in the new Net Billing Tariff (aka NEM 3.0).

NEM 3.0 is a billing structure that pays solar customer far less for their excess electricity than what they buy it for. On average, NEM 3.0 solar owners earn 8 cents per kWh for the excess production and buy electricity from the grid for 30-40 cents per kWh, depending on their utility rate plan.

This rule would substantially impact current solar owners who have better compensation under NEM 1.0 or NEM 2.0 and wish to add battery storage without switching to NEM 3.0.

Again, this is only a proposal and the California Solar and Storage Association (CALSSA) has promised to push back on this criteria.

The bottom line

In general, solar incentives get worse over time as the cost of solar plummets. However, the CPUC is proposing an extremely valuable solar and battery incentive for eligible low-income households.

This incentive would put the cost-saving benefits of solar and battery in reach for low-income households that spend a disproportionate share of their income on California’s expensive grid electricity.

Connect with an Energy Advisor to create a plan for capturing this incentive!