SGIP Cost Effectiveness Model (SGIPce)

In December 2015, the CPUC released the report “2015 Self-Generation Incentive Program Cost Effectiveness Study,” which reported on costs and cost effectiveness of technologies installed and operated under the Self-Generation Incentive Program (SGIP). The 2015 SGIP Cost Effectiveness Study updates an earlier 2011 study.

Cost effectiveness study results are generated by an SGIP cost effectiveness model entitled 2014 SGIPce. The 2014 SGIPce model is a publicly available modeling tool that allows users the ability to evaluate the current and future cost effectiveness of individual distributed generation and storage technology technologies or a portfolio of these technologies (e.g., SGIP). The model is also set up to enable users to change inputs. Among the specific model objectives are the following:
  • The model is intended to be transparent in the inputs placed into it, the manner in which the inputs are treated and how results are calculated. The model is also dynamic, enabling users to modify the model and make model runs using alternative assumptions. Users can overwrite values in the model to deal with a variety of different conditions than those available in the model including different system costs, operating profiles, and treatment of useful waste heat recovery.
  • The model is developed in Excel 2010 using Visual Basic and the code is visible using a Visual Basic editor.
  • The model includes a User Guide, which walks users through the various pull down menus, entries, and resulting outputs.
  • Uses the Standard Practice Manual tests modified in accordance with the August 2009 ALJ ruling to evaluate SGIP cost effectiveness. The model specifically treats the following tests:
    • Participant Cost Test
    • Total Resource Cost Test
    • Societal Total Resource Cost Test
    • Program Administrator Cost Test
  • Provides comprehensive coverage of distributed generation and storage technologies eligible under the SGIP. Modeled technologies include wind turbines; pressure reduction turbines; stand-alone energy storage systems; Organic Rankine Cycle waste heat to power systems; and IC engines, gas turbines, microturbines, and fuel cells powered by natural gas, directed biogas, or onsite biogas.
  • Allows evaluation of SGIP technologies with 2014 costs and how these SGIP costs may change in the future based on learning curves. Evaluations of future electric and gas rates use CEC electric and gas rate forecasts. Future costs of SGIP technologies are based on learning curves developed from historic technology production volumes and prices.
  • Enables insights into the impact of changing incentive levels among different technologies. The model generates modified internal rates of returns (MIRR) for the baseline cases on “no incentive” and current (2014) incentive level; plus, generates incentive levels corresponding to MIRR levels ranging from 5 to 15% at individual percentage point increases.