SGIP Explained: What’s In, Out, and Missing In the Newly Expanded Program

The California Public Utilities Commission’s (CPUC) recent decision to modify and expand the Self Generation Incentive Program (SGIP) was news that was welcomed by the Distributed Generation (DG) and Combined Heat and Power (CHP) industries. Now, the fun part, understanding what was modified, added, removed, etc. from the program.


Here’s a quick tutorial based on our reading, understanding, and analysis of the recent decision. You can do what we did and read the documents yourself or you can get a quick snapshot below. Please note: Some decisions are still under evaluation and will require further discussion at CPUC-sponsored workshops. However, what’s summarized below is the CPUC’s current position on SGIP.


The decision expanded the list of eligible technologies from an extremely limited list to now include wind turbines, fuel cells, gas turbines, micro-turbines and internal-combustion (IC) engines, organic Rankine cycle / waste-heat capture, combined heat and power (CHP), advanced energy storage (AES), and pressure reduction turbines. The CPUC removed solar technologies from the SGIP and established its own separate program. All of these technologies are eligible to receive up-front and performance-based incentives (PBI) —50% upfront, 50% PBI—based on kWh generation of on-site load.


The goal for all of these technologies is to help California reduce its greenhouse gas emissions (GHG baseline is 349 kg CO2/MWh), and use the power “inside the fence” as opposed to exporting/selling it to the utility (up to 25% can be exported). A PBI will be based on a technology’s performance in meeting these goals.  


The maximum total incentives per watt of capacity that each technology may receive are summarized in the table below:

In addition to expanding the program to include a more comprehensive list of DG and CHP technologies, and specifying new incentive amounts, the CPUC also made some important decisions regarding metering and warranty requirements, budget allocation among eligible technologies, and eligibility requirements.

Here’s a quick summary of those key decisions:


Metering Requirements
SGIP now requires that all SGIP facilities, as a condition of receiving incentives, must install metering equipment capable of measuring and recording 15-minute interval data on electrical generation out, and (where applicable) fuel input, heat output (for CHP), and storage system charging and discharging.


They must also  report the data to the Program Administrator (a.k.a. your utility) on a quarterly basis for the first five years of operation. The owner, manufacturer or contractor can fulfill this responsibility.


There is still some debate on who carries the cost of monitoring the equipment that hasn’t yet been resolved.


Warranty Requirements
It’s not final yet, but the SGIP plans to hold a workshop to discuss its recommendation to have a 10-year service warranty. Currently, the SGIP only requires projects have a 5-year warranty on parts.


Budget Allocation
The budget is broken down into 75% for renewable and emerging technologies and 25% non-renewable.  There’s a supplier concentration as well. No more than 40% of the annual statewide budget may be allocated to any single manufacturer’s technology during a calendar year. The maximum project incentive is $5 million.


How does this impact the Leva Energy Power Burner?
The newly expanded SGIP sweetens the already sweet opportunity for boiler owners in California who are under the gun to meet ultra-low NOx emission regulations. The Leva Energy Power Burner qualifies for a $500/kW rebate meaning that your business or institution can receive up to $50,000 back in your pocket. That’s on top of the already attractive value proposition that the Power Burner provides (~$0.065 / kWh LCOE).

Chevron Supports Clean Energy Startups

Succeeding with Small-Scale DG

A successful Distributed Generation (DG) installation is all about finding the thermal load. Although self-evident to all engineers and planners of large and small Combined Heat and Power (CHP), this fact is much more pertinent to the small-scale (<250 kW) generators whose customers often face a high investment capital for equipment and installation ($/kW). Today, this is the world of conventional microturbines which, by and large, have struggled to achieve the Return on Investment (ROI) desired by DG users, and thus must rely on government financial incentives to continue in business.

While attention has been focused on engineering more energy efficient microturbines – with power conversion of 30% LHV – the physics and limitations of turbine materials and fabrication are such that efficiencies can never approach those of larger industrial or utility turbines. If that is the case, then microturbines must have lower turnkey cost, greater reliability, and greater value-added use of their waste heat than today’s commercial units to reach broader CHP market adoption. This is a fundamental shift that requires a new and innovative approach.

Leva Energy has taken this approach by emphasizing the thermal needs of the customer, first, while providing the lowest cost electricity for an attractive ROI. We must further ask ourselves “what is the heat recovery method for microturbine exhaust that offers the greatest value-added use of that waste heat?” While conventional “integrated” microturbine CHP systems carry their own post-recuperator heat exchangers capable of producing hot water in small quantities, this lower temperature waste heat recovery often fixes the power/heat ratio, and offers low or no thermal load flexibility. Although adequate for niche markets that use low quantities of 140 F water, such systems are also limited to overall CHP efficiencies of 65-70%, or lower in cases where the integrated hot water boiler is bypassed to meet lower demand. Steam generation and higher demand hot water systems that require backup burners, instead, provide much higher overall CHP efficiencies (80-85% HHV) with variable thermal load, and often requiring much less expensive microturbines with a much higher power conversion efficiencies approaching 90% (HHV).

Distributed Generation is all about $/kW and MTBF. Period.

Welcome to Leva Energy’s new blog and thanks for reading. As a new entrant in a well-established market of century-old companies mostly named after their founders who died decades ago, we decided to move forward with our blog even though we felt the average industrial boiler operator might not be the blog-reading type. But, our audience needs to be larger. The topics, issues and current events that Leva intends to write about in our blog will go beyond the features, benefits and advantages of our product. In the energy market, new leaders need to emerge for cost-effective and market-ready innovation to occur.

That brings me to our topic du jour. I could have simplified my earlier sentence to read “…for innovation to occur,” but I intentionally added “cost-effective” and “market-ready.” Why?  Because we’ve been here before. The promise of distributed generation providing a cost-effective, cleaner and smarter approach to power generation was hyped decades ago. On paper, it made a lot of sense. Generate power locally and it’ll save you money, Mother Nature will thank you, and you’ll never have another black out. Well, back then, the market didn’t agree. Companies rushed to market with innovative technology, but failed to overcome the two central hurdles to a successful DG solution. Reliability and Cost.

DG companies compete against the grid. It doesn’t matter what technology you offer. A potential customer choosing to do nothing instead of adopting a DG solution is a win for the utility company. What will motivate a customer to choose DG over the grid is providing a solution that will lower their electricity bills, no matter where they are located, and will run like a Maytag washing machine. Install it and forget about it.

The investments going into CleanTech companies give us hope, but we don’t want another repeat of the past. That’s why at Leva we prioritized reliability (Mean Time between Failures MTBF) and cost ($/kilowatt) above any other product design objective. At the end of the day, we sell a commodity called electricity. 

We hope you'll follow our blog and visit the rest of our web site. And feel free to get in touch with us.