Self-Generation Incentive Program (SGIP) SBCCOG Energy Management August 24, 2016

Self-Generation Incentive Program (SGIP) The Self-Generation Incentive Program (SGIP) provides financial incentives for the installation of new qualifying technologies that are installed to meet all or a portion of the electric energy needs of a facility. Current Program Handbook can be found at www.sce.com/SGIP. The Self Generation Incentive Program (SGIP) provides financial incentives for the installation of new qualifying technologies that are installed to meet all or a portion of the electric energy needs of a facility. The purpose of the SGIP is to contribute to Greenhouse Gas (GHG) emission reductions, demand reductions and reduced customer electricity purchases, resulting in the electric system reliability through improved transmission and distribution system utilization; as well as market transformation for distributed energy resource (DER) technologies. A broad variety of distributed generation (DG) systems are supported under the SGIP. Prior to 2007, the SGIP provided incentives to both fossil-fueled and biogas-fueled gas turbines, internal combustion (IC) engines, fuel cells and microturbines; as well as to solar photovoltaic (PV) and wind turbine systems. With the emergence of the California Solar Initiative (CSI), PV system eligibility was eliminated in 2007. PV incentives were provided instead under the California Solar Initiative. Beginning in 2008, the list of eligible technologies was expanded to include advanced energy storage systems coupled with renewable energy systems (when installed in conjunction with wind or fuel cells), waste heat to power systems and pressure reduction turbines. Gas turbines, microturbines and internal combustion engines were excluded from the SGIP starting in 2007 and became eligible again in 2011 along with stand alone advanced energy storage systems following a review of their benefits to the program and ratepayers.

Self-Generation Incentive Program (SGIP) Decision introducing Program Modifications The major changes to SGIP effected by this decision include: SGIP incentives shall be administered on a continuous basis with incentive levels declining based on the capacity reserved in the program, similar to the California Solar Initiative; The incentive budgets divided between two broad categories: energy storage and generation. Energy storage is allocated 75% of program funds, with 15% of the energy storage budget carved out for projects less than or equal to 10 kilowatts. Generation is allocated the remaining 25%, with 10% carved out for renewable generation projects; Beginning with program year 2017, generation projects consuming natural gas must use a minimum of 10% biogas to receive an SGIP incentive. The minimum requirement increases to 25% in 2018, 50% in 2019, and 100% in 2020; Each participating project developer will be capped at a total of 20% of the incentive budget on a statewide basis. This replaces the previous 40% cap that applied to equipment manufacturers; *Regarding natural gas – perfect for water treatment facilities and/or facilities with onsite natural gas production. Directed biogas, provider will inject biogas into the main gas line. *Regarding project developer – provide an opportunity to smaller developers to participate in this growing market. The 20% project developer cap starts over each program Step. Who is the project developer? It will be defined in the 2017 SGIP Handbook.

Self-Generation Incentive Program (SGIP) Eligible Technologies Basic Program Requirements Sized up to onsite demand Minimum /Maximum Size: None Incentive Limit: 3 MW Equipment must be commercially available, factory new generating equipment EE Audit by utility or 3rd party Interconnection Application Fee 100% Site Inspection Wind Turbine Waste Heat to Power Technologies Pressure Reduction Turbine Internal Combustion Engine – CHP Microturbine – CHP Gas Turbine – CHP Steam Turbine – CHP Fuel Cell – CHP or Electric only Advanced Energy Storage An Energy Efficiency Audit (EEA) report issued within the last 5 years identifying the payback periods for all prescribed measures should be submitted. EEA reports must be issued by utility, PA, or qualified vendor/consultant. Application Fee (All Projects) Equal to 5% of the amount of requested incentive amount, due at the time of application, payable by check only and should reference the project by facility address. The application fee will be refunded upon completion and verification of the installed SGIP Project and incentive payment

Self-Generation Incentive Program (SGIP) Summary of rebate step downs ($/Wh) for Energy Storage Technologies  Incentive levels for current program cycle Step 1 Step 2 Step 3 Step 4 Step 5 Large Scale Energy Storage (>10 kW) without ITC $0.50/Wh $0.45/Wh $0.40/Wh $0.35/Wh $0.30/Wh Large Scale Energy Storage (>10 kW) with ITC $0.36/Wh $0.31/Wh $0.26/Wh $0.21/Wh $0.16/Wh Residential Energy Storage (<=10 kW) Adopted Incentives for Generation Technologies   Step 1 Step 2 Step 3  Incentive levels for current program cycle Incentive per kW Capacity Max. Incentive w/ Biogas Adder Max. Incentive w/ Biogas Adder Wind $0.90 n/a $0.80 $0.70 Waste heat to power $0.60 $0.50 $0.40 Pressure reduction turbine $1.20 $1.10 $1 Internal Combustion CHP Microturbine CHP Gas turbine CHP Fuel cell CHP Fuel cell electric only ITC=Investment Tax Credit at 30% until 2019 SGIP provides an additional 20% bonus for California-supplied products The SGIP components should be commercial availability.

Self-Generation Incentive Program (SGIP) Expectation Program Handbook for with the SGIP program modifications should be available first quarter 2017. Current Program Handbook can be found at www.sce.com/SGIP. Once program opens under new guidelines it is anticipated incentives will go quickly. Once SGIP incentive funds are spent the Commission would have to add additional funds to keep the program open. Projects must be completed 18 months after submittal of SGIP application When you reach the point in your project where you are ready to submit an application to SGIP, please go to our web site www.sce.com/sgip and www.selfgenca.com. Jim Stevenson, SCE SGIP Program Manager at SGIPGroup@sce.com Step 1 “Energy Storage Technologies” may be fulfilled within a day. If we reach the maximum applications on day one, a lottery system will determine the applications who will receive Step 1 funding. If you are moved to the next Step, the applicant will be asked if you “still” want to move into the next Step. It may not be financially feasible for the project in the next Step. A project is considered complete when the system is completely installed, interconnected, permitted, and capable of producing electricity in the manner and in the amounts for which it was designed, and the energy efficiency audit.