(a)(1)It is the intent of the Legislature that the self-generation incentive program 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. It is the further intent of the Legislature that the commission, in future proceedings, provide for an equitable distribution of the costs and benefits of the program.

(2)(A)The commission, in consultation with the Energy Commission, may authorize the annual collection of not more than double the amount authorized for the self-generation incentive program in the 2008 calendar year, through December 31, 2019. The commission shall require the administration of the program for distributed energy resources originally established pursuant to Chapter 329 of the Statutes of 2000 until January 1, 2021. On January 1, 2021, the commission shall provide repayment of all unallocated funds collected pursuant to this section to reduce ratepayer costs.

(B)The annual collection authorized pursuant to subparagraph (A) shall be reduced by the amount established by the commission pursuant to Section 2839.5, except that the commission shall ensure that sufficient funding is collected and retained for existing energy storage system reservations or applications in process and for measurement, evaluation, or other administration requirements related to energy storage systems.

(C)The commission shall ensure an orderly transition of funding of energy storage systems from the self-generation incentive program under this section to the Energy Storage Initiative (Article 2 (commencing with Section 2839.50) of Chapter 7.7 of Part 2), with the goals of minimizing disruption or delay for program participation and administration, honoring existing energy storage system reservations or applications in process under the self-generation incentive program, and ensuring sufficient funding is available to comply with measurement, evaluation, or other administrative requirements of the self-generation incentive program related to energy storage systems. When rebate applications pursuant to Section 2839.52 become available to customers, the commission shall cease collection of funds pursuant subparagraph (B) for energy storage systems for the self-generation incentive program. Any moneys intended for energy storage systems that are collected under the self-generation incentive program, but are unreserved or unencumbered, may be used for the purposes of the Energy Storage Initiative, if doing so does not violate any other provisions of this section.

(3)The commission shall administer solar technologies separately, pursuant to the California Solar Initiative adopted by the commission in Decisions 05-12-044 and 06-01-024, as modified by Article 1 (commencing with Section 2851) of Chapter 9 of Part 2 of Division 1 of this code and Chapter 8.8 (commencing with Section 25780) of Division 15 of the Public Resources Code.

(b)(1)Eligibility for incentives under the self-generation incentive program shall be limited to distributed energy resources that the commission, in consultation with the State Air Resources Board, determines will achieve reductions in emissions of greenhouse gases pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code).

(2)On or before July 1, 2015, the commission shall update the factor for avoided greenhouse gas emissions based on the most recent data available to the State Air Resources Board for greenhouse gas emissions from electricity sales in the self-generation incentive program administrators’ service areas as well as current estimates of greenhouse gas emissions over the useful life of the distributed energy resource, including consideration of the effects of the California Renewables Portfolio Standard.

(c)Eligibility for the funding of any combustion-operated distributed generation projects using fossil fuel is subject to all of the following conditions:

(1)An oxides of nitrogen (NOx) emissions rate standard of 0.07 pounds per megawatthour and a minimum efficiency of 60 percent, or any other NOx emissions rate and minimum efficiency standard adopted by the State Air Resources Board. A minimum efficiency of 60 percent shall be measured as useful energy output divided by fuel input. The efficiency determination shall be based on 100 percent load.

(2)Combined heat and power units that meet the 60-percent efficiency standard may take a credit to meet the applicable NOx emissions standard of 0.07 pounds per megawatthour. Credit shall be at the rate of one megawatthour for each 3,400,000 British thermal units (Btus) of heat recovered.

(3)The customer receiving incentives shall adequately maintain and service the combined heat and power units so that during operation the system continues to meet or exceed the efficiency and emissions standards established pursuant to paragraphs (1) and (2).

(4)Notwithstanding paragraph (1), a project that does not meet the applicable NOx emissions standard is eligible if it meets both of the following requirements:

(A)The project operates solely on waste gas. The commission shall require a customer that applies for an incentive pursuant to this paragraph to provide an affidavit or other form of proof that specifies that the project shall be operated solely on waste gas. Incentives awarded pursuant to this paragraph shall be subject to refund and shall be refunded by the recipient to the extent the project does not operate on waste gas. As used in this paragraph, “waste gas” means natural gas that is generated as a byproduct of petroleum production operations and is not eligible for delivery to the utility pipeline system.

(B)The air quality management district or air pollution control district, in issuing a permit to operate the project, determines that operation of the project will produce an onsite net air emissions benefit compared to permitted onsite emissions if the project does not operate. The commission shall require the customer to secure the permit prior to receiving incentives.

(d)In determining the eligibility for the self-generation incentive program, minimum system efficiency shall be determined either by calculating electrical and process heat efficiency as set forth in Section 216.6, or by calculating overall electrical efficiency.

(e)(1)Eligibility for incentives under the program shall be limited to distributed energy resource technologies that the commission determines meet all of the following requirements:

(A)The distributed energy resource technology shifts onsite energy use to off-peak time periods or reduces demand from the grid by offsetting some or all of the customer’s onsite energy load, including, but not limited to, peak electric load.

(B)The distributed energy resource technology is commercially available.

(C)The distributed energy resource technology safely utilizes the existing transmission and distribution system.

(D)The distributed energy resource technology improves air quality by reducing criteria air pollutants.

(2)(A)For purposes of this subdivision, “distributed energy resource technologies” does not include energy storage systems that are eligible for a rebate pursuant to Article 2 (commencing with Section 2839.50) of Chapter 7.7 of Part 2.

(B)This paragraph becomes operative when rebate applications pursuant to Section 2839.52 become available to customers.

(f)Recipients of the self-generation incentive program funds shall provide relevant data to the commission and the State Air Resources Board, upon request, and shall be subject to onsite inspection to verify equipment operation and performance, including capacity, thermal output, and usage to verify criteria air pollutant and greenhouse gas emissions performance.

(g)In administering the self-generation incentive program, the commission shall determine a capacity factor for each distributed generation system energy resource technology in the program.

(h)(1)In administering the self-generation incentive program, the commission may adjust the amount of rebates and evaluate other public policy interests, including, but not limited to, ratepayers, energy efficiency, peak load reduction, load management, and environmental interests.

(2)The commission shall consider the relative amount and the cost of greenhouse gas emissions reductions, peak demand reductions, system reliability benefits, and other measurable factors when allocating program funds between eligible technologies.

(i)The commission shall ensure that distributed generation resources are made available in the program for all ratepayers.

(j)In administering the self-generation incentive program, the commission shall provide an additional incentive of 20 percent from existing program funds for the installation of eligible distributed generation resources manufactured in California.

(k)The costs of the program adopted and implemented pursuant to this section shall not be recovered from customers participating in the California Alternate Rates for Energy (CARE) program.

(l)The commission shall evaluate the overall success and impact of the self-generation incentive program based on the following performance measures:

(1)The amount of reductions of emissions of greenhouse gases.

(2)The amount of reductions of emissions of criteria air pollutants measured in terms of avoided emissions and reductions of criteria air pollutants represented by emissions credits secured for project approval.

(3)The amount of energy reductions measured in energy value.

(4)The amount of reductions of customer peak demand.

(5)The ratio of the electricity generated by distributed energy resource generation projects receiving incentives from the program to the electricity capable of being produced by those projects, commonly known as a capacity factor.

(6)The value to the electrical transmission and distribution system measured in avoided costs of transmission and distribution upgrades and replacement.

(7)The ability to improve onsite electricity reliability as compared to onsite electricity reliability before the self-generation incentive program technology was placed in service.

For purposes of this article, the following terms have the following meanings:

(a)(1)“Energy storage system” means commercially available technology that is capable of absorbing energy, storing it for a period of time, and thereafter dispatching the energy. An “energy storage system” may have any of the characteristics in paragraph (2), shall accomplish one of the purposes in paragraph (3), and shall meet at least one of the characteristics in paragraph (4).

(2)An “energy storage system” may have any of the following characteristics:

(A)Be either centralized or distributed.

(B)Be either owned by a load-serving entity or local publicly owned electric utility, a customer of a load-serving entity or local publicly owned electric utility, or a third party, or is jointly owned by two or more of the above.

(3)An “energy storage system” shall be cost effective and either reduce emissions of greenhouse gases, reduce demand for peak electrical generation, defer or substitute for an investment in generation, transmission, or distribution assets, or improve the reliable operation of the electrical transmission or distribution grid.

(4)An “energy storage system” shall do one or more of the following:

(A)Use mechanical, chemical, or thermal processes to store energy that was generated at one time for use at a later time.

(B)Store thermal energy for direct use for heating or cooling at a later time in a manner that avoids the need to use electricity at that later time.

(C)Use mechanical, chemical, or thermal processes to store energy generated from renewable resources for use at a later time.

(D)Use mechanical, chemical, or thermal processes to store energy generated from mechanical processes that would otherwise be wasted for delivery at a later time.

(b)“Load-serving entity” has the same meaning as defined in Section 380.

(c)“New” means, in reference to an energy storage system, a system that is installed and first becomes operational after January 1, 2010.

(d)“Offpeak” means, in reference to electrical demand, a period that is not within a peak demand period.

(e)“Peak demand period” means a period of high daily, weekly, or seasonal demand for electricity. For purposes of this chapter, the peak demand period for a load-serving entity shall be determined, or approved, by the commission and shall be determined, or approved, for a local publicly owned electric utility, by its governing body.

(f)“Procure” and “procurement” means, in reference to the procurement of an energy storage system, to acquire by ownership or by a contractual right to use the energy from, or the capacity of, including ancillary services, an energy storage system owned by a load-serving entity, local publicly owned electric utility, customer, or third party. Nothing in this chapter, and no action by the commission, shall discourage or disadvantage development and ownership of an energy storage system by an electrical corporation.

(a)The Legislature finds and declares all of the following:

(1)The electrical system is evolving from a model dominated by centralized powerplants and long distance transmission of electricity toward a model focused on local energy sources located close to customers of electrical load.

(2)A decentralized electrical system with distributed storage can create greater energy independence and energy security by providing for increased resiliency of the power supply and smoother integration of renewable energy.

(3)Locating power supply equipment near the consumption of electricity reduces losses associated with the long-distance transmission of electricity.

(4)Empowering customers to take more active roles in the state’s electrical system leverages private capital, protects customers from rising energy costs, and promotes customer understanding and engagement.

(5)Installation of energy storage systems on a mass scale is likely to enable the integration of renewable energy sufficient to meet the state’s greenhouse gas emissions reduction goals.

(6)A mass market for energy storage systems would create benefits for local economies and the state economy.

(7)California is a worldwide leader in the development of energy storage systems and advanced management of the electrical grid, but the market is so small that this leadership position is not firm.

(8)Growing demand for energy storage technologies will create jobs in California, providing an opportunity to provide job training, recruitment, and targeted employment, so that entry level career path jobs in low-income, disadvantaged communities are created in this nascent industry.

(9)Prioritizing the deployment of storage technologies in low-income and disadvantaged communities will help increase access to clean, renewable energy for all Californians, and will provide local economic development.

(b)It is the intent of the Legislature to do all of the following:

(1)Make energy storage systems a mainstream technology that enables utility customers to help reduce variation in electricity consumption in local circuits of the electricity distribution system and the statewide electrical system.

(2)Create a marketplace for energy services that harnesses innovation stimulated by competition and that compensates distributed energy resources for the electrical attributes that those resources can provide to the electrical system.

(3)Achieve market transformation for energy storage systems. Market transformation would enable advanced technology energy companies and associated entities to achieve the scale and experience necessary to offer solutions at prices that are cost effective for customers to adopt to help address time-varying energy needs of the electrical system.

(4)Use customer-sited energy storage systems as a primary strategy to meet the reduction targets for the emissions of greenhouse gases established by the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with 38500) of the Health and Safety Code), integrate renewable energy resources, and reduce system costs.

For purposes of this article, the following definitions apply:

(a)“Customer-sited energy storage system” means a device that is capable of storing and dispatching energy, that operates in parallel with a utility distribution system, and that is connected on the customer side of the meter. A customer-sited energy storage system includes, but is not limited to, an energy storage system that is a component of a multifamily solar photovoltaic system that distributes solar credits to tenant meters located at the same property through virtual net metering.

(b)“Disadvantaged community” means either of the following:

(1)A disadvantaged community identified pursuant to Section 39711 of the Health and Safety Code.

(2)The top quartile of census tract as identified by the California Communities Environmental Health Screening Tool on either a statewide or utility territorywide basis, whichever is broader.

(c)“Dispatch capable” means having the communication capabilities to accept and execute remote or centralized dispatch commands that cause a customer-sited energy storage system to charge or discharge the stored electricity.

(d)“Low-income community” means a census tract or equivalent geographic area defined by the United States Census Bureau in which at least 50 percent of households have an income less than 60 percent of the area median gross income.

(e)“Low-income residential housing” means either of the following:

(1)A multifamily residential building of at least two rental housing units that is operated to provide deed-restricted low-income residential housing, as described in clause (i) of subparagraph (A) of paragraph (3) of subdivision (a) of Section 2852 and that meets one or both of the following conditions:

(A)The property is located in a disadvantaged community or low-income community.

(B)At least 80 percent of the households living in the building have incomes at or below 60 percent of the area median income, as defined in subdivision (f) of Section 50052.5 of the Health and Safety Code.

(2)An individual low-income residence, as described in subparagraph (C) of paragraph (3) of subdivision (a) of Section 2852.

(a)To achieve the intent specified in subdivision (b) of Section 2839.50, the commission, on or before December 1, 2018, shall establish the Energy Storage Initiative to provide rebates to customers of electrical corporations for the installation customer-sited energy storage systems that are dispatch capable. The rebate incentive levels shall decline to zero as market penetration increases.

(b)(1)The commission shall, as a part of a new or existing proceeding, determine the annual amount to be collected by electrical corporations for the Energy Storage Initiative from January 1, 2018, through December 31, 2027.

(2)The commission shall establish the annual amount described in paragraph (1) at an amount the commission determines necessary to achieve the intent specified in subdivision (b) of Section 2839.50, but that is no less than the annual amount allocated for energy storage systems pursuant to the commission’s Decision 16-06-055 implementing Section 379.6 and no more than the maximum amount authorized for energy storage pursuant to the commission’s Decision 17-04-017 implementing paragraph (2) of subdivision (a) of Section 379.6. Collections in the first year of the program shall be prorated based on the date when program funds become available.

(3)The costs of the Energy Storage Initiative shall not be recovered from customers participating in the California Alternate Rates for Energy (CARE) program.

(c)Eligibility for incentives under the Energy Storage Initiative shall be limited to customer-sited energy storage systems that the commission determines safely utilize the existing transmission and distribution system, and provide benefits to the electrical grid.

(d)A minimum of 30 percent of the amount collected shall be reserved for both of the following collectively:

(1)Energy storage systems in low-income residential housing.

(2)Energy storage systems on properties located in disadvantaged communities or low-income communities that are owned by a small business, local or state government agency, education institution, or nonprofit organization.

(e)All installers of energy storage systems funded by the Energy Storage Initiative shall be subject to local and targeted hiring minimum requirements as determined by the commission. Those projects funded pursuant to subdivision (d) shall endeavor to have local hiring requirements greater than the minimum requirements set by paragraph (2), with correspondingly increased incentive levels. The commission shall coordinate with energy storage installers and developers and with agencies and nonprofit organizations managing workforce development programs that serve low-income and disadvantaged communities and consider building upon any workforce development standards established under the Multifamily Affordable Housing Solar Roofs Program (Chapter 9.5 (commencing with Section 2870)) and Single Family Affordable Solar Homes Program to develop both of the following:

(1)Guidelines for qualified workforce development programs that will provide energy storage training to low-income and disadvantaged workers. A portion of the moneys reserved pursuant to subdivision (d) shall be invested in energy storage job training programs established by workforce development agencies or organizations that meet these guidelines.

(2)Local hiring and targeted hiring minimum requirements for installers of energy storage systems funded by the Energy Storage Initiative that create entry level career path jobs for low-income or disadvantaged workers.

(f)In administering the Energy Storage Initiative, the commission shall do both of the following:

(1)Provide an additional incentive of 20 percent from existing program funds for the installation of eligible energy storage systems manufactured in California.

(2)Provide an enhanced incentive level for installations of eligible energy storage systems funded with moneys reserved pursuant to subdivision (d). The commission may adjust incentive levels based on the type and size of the installation.

(g)The commission shall ensure that projects funded with moneys reserved pursuant to subdivision (d) are offered technical assistance and information to secure incentives for other energy programs the projects may qualify for.

(h)The commission shall ensure that moneys reserved pursuant to subdivision (d) are available for energy storage systems that are components of the renewable systems approved pursuant to the Multifamily Affordable Housing Solar Roofs Program (Chapter 9.5 (commencing with Section 2870)). The commission shall establish a streamlined process for making reservations under the Energy Storage Initiative for eligible energy storage systems concurrent with the solar photovoltaic reservations made under the Multifamily Affordable Housing Solar Roofs Program. The commission shall establish a funding priority for the Energy Storage Initiative that gives preference for projects that are eligible for and concurrently apply for incentives under the Multifamily Affordable Housing Solar Roofs Program.

(i)A program administrator shall do both of the following:

(1)Make data regarding participation in the Energy Storage Initiative publicly available, including, but not limited to, data regarding job training, local hiring, and compliance with the requirements of subdivision (e).

(2)Provide education, training, and resources to support market deployment.

(j)Upon full implementation of the Energy Storage Initiative and after the two years of the operation of the initiative, the commission may modify incentive levels and limit eligibility based on income levels for residential applicants to ensure market transformation for energy storage systems and achieve other goals of the initiative. The commission shall rely on actual data from the initiative and may also rely on program data from other incentive programs, such as the California Solar Initiative or the Clean Vehicle Rebate Project, to determine what, if any, modifications may be appropriate for residential applicants.

(a)On or before December 1, 2018, the governing board of a local publicly owned electric utility with more than 100,000 service connections shall collect an annual amount, through December 31, 2027, for an Energy Storage Initiative to provide rebates to customers of that utility for the installation of customer-sited energy storage systems that are dispatch capable.

(b)By December 1, 2018, the local publicly owned electric utility shall report the budget for its Energy Storage Initiative to the Energy Commission.

(c)The local publicly owned electric utility shall make available publicly data regarding participation in its Energy Storage Initiative.

(d)An electrical cooperative, as defined in Section 2776, with an annual electrical demand exceeding 700 gigawatthours, as determined on a three-year average commencing with January 1, 2013, shall comply with the requirements of this section.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.