SDGE Residential Storage Pilot Program Is Suspicious

Earlier this month SDG&E released its Distributed Resources Plan to the California PUC and included an exciting new residential energy storage initiative that promises to be the boost the industry has been waiting for. It promises to be a stepping stone to a residential energy storage design that benefits both the utility and the homeowner.

Energy storage is commonly referred to as “the next big thing” in renewable energy. Mother Nature can be harnessed to generate more energy than human kind will likely every need, however, she produces it on her own schedule. Without the ability to store this energy to deploy at night, or when the wind is not blowing, we will continue to rely on dirty fossil fuels to fill in the gaps.

Aside from environmental benefits, storage promises to be a powerful tool for reducing the cost of energy for rate payers. Electric rate structure in the commercial realm is such a good fit for energy storage you would think utilities designed it for this purpose. Demand metering, TOU, peak shaving… a healthy storage industry has already blossomed in the commercial world.

Unfortunately the same cannot be said on the residential side. Homeowners are held back by policy, rate design, and cost. Even though most solar homeowners went solar to reduce their electricity bill, every single one of them has daydreamed of someday adding a battery system and disconnecting from the grid. Net metering? Rate hikes? Blackouts? Who cares, I’m off the grid. Once it’s financially feasible, people will do this in droves.

SDG&E knows this, they know their residential rate-payer base is chomping at the bit for the opportunity to abandon them. That’s why their new residential storage pilot program is suspect.

The initiates goes something like this: owners of residential energy storage will receive a lower rate on the electricity in return for giving SDG&E access to deploy energy from their battery out to the grid during times of high demand. This arrangement will be designed in a way as to not deplete the homeowner’s ability to use their stored energy for their own purposes. To make this deal even sweeter, SDG&E might offer cash incentives to participate in this program – this coupled with SGIP and the homeowner could defer almost all out-of-pocket expenses of owning the system. SDG&E’s motivation is this collective of deployable energy could offset the need for expensive utility-side infrastructure.

Too good to be true? Probably so. SDG&E, and any of California’s other utility monopolies know residential energy storage represents several spins deeper into their death spiral. It is likely this program has been proposed for the sole purpose of giving SDG&E something to point to when accused of not supporting energy storage. It is unlikely that you, or anyone you know, will be invited to participate in this program. It will be implemented carefully as to not actually give residential energy storage any forward momentum.