What is SCE's New Home Energy Storage Pilot Incentive? | Solar.com

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What is SCE’s New Home Energy Storage Pilot Incentive?

Southern California Edison — the state’s second-largest utility provider — is testing a new incentive program that aims to pre-install batteries in 2,400 new homes in its service territory, for a total capacity of 12.2 Megawatts.

In May 2023, SCE unveiled the New Home Energy Storage Pilot (NHESP), which offers financial incentives to home builders for installing batteries to pair with the solar panels mandated for new homes under Title 24 building standards. While the incentive goes directly to builders, there are benefits for SCE customers buying homes already equipped with solar and battery.

In this article, we’ll explore how NHESP works, how much the incentive is worth, and how this pilot can benefit Californians.

How does SCE’s New Home Energy Storage Pilot work?

Rather than creating additional incentives for homeowners to add solar and battery to existing homes, the New Home Energy Storage Pilot incentivises home builders to pre-install solar and battery during the construction process. The objective of the pilot is to evaluate whether incentivising builders is a more efficient and cost-effective way to increase residential storage adoption.

As such, the NHESP a financial incentive paid directly to building developers for installing battery storage paired with solar panels in newly constructed homes located in SCE’s service territory. The pilot program is applicable to both single-family and multifamily homes subject to California’s Title 24 Building and Energy Efficiency Standards, which, among other things, mandates solar panels on newly constructed homes.

Builders can apply for funding between May 2022 and November 2024. If accepted, they receive 50% upfront and 50% upon completion and inspection of the project, and must provide progress reports every three months.

In addition to the financial incentive, installing battery storage can help builders satisfy Title 24 energy efficiency standards.

How much is the NHESP incentive worth?

The NHESP financial incentive is worth either $135/kWh or $765/kWh of battery capacity installed, depending on the type of housing being built. The average battery is around 10 kWh, so this translates to $1,350 for the general market and $7,650 for affordable housing.

Housing type Incentive rate Total funding available
Affordable housing $765 per kWh $1 million
General market or mixed-use $135 per kWh $3 million

In order to qualify for the affordable housing incentive rate, the project must meet the same criteria for the Equity Budget in California’s Self-Generation Incentive Program (SGIP). There are also builder requirements that, according to SCE, include a “non-profit builder status, a permanent covenant on the property title, or other documentation required to qualify for credits per the California Tax Credit Allocation Committee.​”

How does NHESP benefit homeowners?

And even though the NHESP incentive doesn’t go to directly to homeowners, there are benefits to buying a new home already equipped with solar and battery. These include:

  • Rolling the cost of solar and battery into house payments
  • Skipping the shopping and installation process
  • Having a backup power source built into your home

Most notably, new homes in California are required to have solar panels, which, in SCE territory, are now billed under NEM 3.0 solar billing. Under NEM 3.0 billing, it is much more beneficial to store and use your own solar production than to export it onto the grid. Battery storage makes this possible and can provide backup power during outages.

Residential battery storage also increases grid resiliency and can prevent blackouts from happening. For example, during a heatwave in September 2022, residential batteries discharged ~340 MW of power onto the grid to prevent rolling blackouts. The 12.2 MW of residential storage expected to come online as a result of NHESP is a benefit to all homeowners — not just the ones who buy homes with solar and battery already installed.

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