When it comes to energy storage incentives, there are primarily two types: rebates and performance-based incentives. Each type has distinct characteristics that affect how energy storage installations are financially supported.
Rebates
- Definition: Rebates are upfront payments provided to individuals or businesses after they have installed an energy storage system. These payments are usually a fixed amount per kilowatt-hour (kWh) and are designed to reduce the initial cost of purchasing and installing energy storage equipment.
- Advantages: Rebates make energy storage more accessible by lowering the upfront cost. They are straightforward and easy to understand, as they provide a clear financial benefit at the time of installation.
- Examples: California’s Self-Generation Incentive Program (SGIP) offers rebates for installing energy storage technology. For example, under the SGIP’s Equity Resiliency category, customers can receive up to $1,000 per kWh, which can cover nearly the entire cost of the system.
Performance-Based Incentives
- Definition: Performance-based incentives reward energy storage system owners for providing specific services to the grid, such as peaking power during high demand periods or supplying power during grid failures. These incentives are paid over time based on the system’s performance and contribution to grid stability.
- Advantages: They encourage continued usage and optimal operation of energy storage systems, as payments are contingent on performance. This model can also provide ongoing revenue streams, enhancing the long-term financial viability of the energy storage investment.
- Examples: Programs like Massachusetts’ ConnectedSolutions offer financial incentives and zero percent interest financing to reduce the cost of battery installation and support grid stability. Performance incentives in such programs are typically paid over several years, depending on how much power the battery supplies to the grid during peak periods.
In summary, rebates focus on reducing the initial cost of energy storage installations, while performance-based incentives encourage and reward the active use of these systems over time, contributing to grid stability and services.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-main-differences-between-rebates-and-performance-based-incentives-for-energy-storage/
