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California enlists $1.2B in battery, renewables incentives in war on wildfires

In the wake of catastrophic wildfires that forced California's largest utility, Pacific Gas and Electric Co., into bankruptcy protection and related precautionary power outages that put millions of its customers in the dark, the state will redirect roughly $1.2 billion in battery and renewable energy incentives toward its most impacted communities.

The California Public Utilities Commission on Jan. 16 approved $830 million in new funding for the state's Self-Generation Incentive Program over the next five years, implementing a 2018 state law. Regulators also restructured the program to better support residential and business customers of investor-owned utilities in areas exposed to high fire risks and affected by recent power outages.

The new money, largely aimed at behind-the-meter energy storage, combines with around $400 million in unclaimed incentives in the program at the end of 2019.

Overall, the changes "expand the universe of customers" eligible for the program's incentives, Commissioner Clifford Rechtschaffen said before the PUC unanimously approved the changes. "Broadly, it shifts the focus of [the program] towards promoting resiliency."

"Approximately 90% of program funding will be available for projects that promote resiliency, providing incentives to customers with medical needs in communities that are impacted by wildfires and the threat of wildfires," Rechtschaffen said.

Other commissioners also embraced the program reboot.

"I think this program for far too long has been a massive subsidy focused on different types of so-called market transformation and the need to just subsidize something for the sake of just technology," Commissioner Maria Guzman Aceves said. In contrast, the program will now address "the needs we saw this last fall in tremendously hard-hit areas of the state."

The money collected, at $166 million a year, will fund energy storage technologies. Pacific Gas and Electric, or PG&E, a subsidiary of PG&E Corp., will be responsible for the largest share, 44%, or $72 million a year and $360 million overall. Edison International's Southern California Edison Co. will contribute 34%, $56 million a year and $280 million overall. Sempra Energy's San Diego Gas & Electric Co. and Southern California Gas Co. together will provide 22% of the funding, $38 million a year and $190 million overall.

Last October and November, PG&E rolled out a series of power outages aimed at preventing its power lines from sparking wildfires in dry, windy weather conditions, cutting service for more than 2 million customers, some for days at a time.

Southern California Edison and SDG&E also rely on power cuts to prevent wildfires. Such public safety power shutoffs are a key component of their wildfire safety plans.

The new funding and program changes "dovetail" with the state's efforts to accelerate the use of microgrids, Commissioner Genevieve Shiroma said. Program incentives can be used for batteries and other technologies in microgrids. In September, regulators approved an order to create policies intended to spur microgrid adoption in California.