The main differences between upfront rebates and performance-based payments for battery storage systems are:
Upfront Rebates
- Structure: Provide immediate cost reduction at purchase/installation, either as a direct cash payment or discounted price.
- Calculation: Typically based on usable energy capacity (kWh), with caps like 50% of total project cost or fixed maximums (e.g., $16,000).
- Program Types:
- Capacity-based: $/kWh rate (e.g., $250–$600/kWh in California’s SGIP program).
- Percentage-based: Up to 50% of system cost (e.g., Connecticut’s program).
- Advantage: Lowers initial investment without long-term obligations.
Performance-Based Payments
- Structure: Ongoing payments tied to actual battery usage or grid services provided.
- Requirements:
- Contractual agreements: Utilities often control battery dispatch during peak demand.
- Duration: Commitments typically last 5–10 years (e.g., Connecticut’s 10-year passive dispatch).
- Incentive Type:
- Grid services: Compensation for demand reduction or backup power during outages.
- Performance tiers: Higher payments for low-income participants (e.g., underserved communities receive up to $450/kWh upfront in SGIP, but performance incentives might scale similarly).
Key Comparison
| Feature | Upfront Rebates | Performance-Based Payments |
|---|---|---|
| Payment Timing | Immediate (post-installation) | Ongoing (monthly/annual) |
| Basis | System size/cost | Actual usage or grid contributions |
| Obligations | Minimal/no long-term commitments | Multi-year utility access contracts |
| Example Programs | California SGIP, Connecticut rebates | Utility “bring your own battery” programs |
Upfront rebates prioritize accessibility by lowering costs upfront, while performance-based models incentivize sustained grid support through operational commitments. Some programs (e.g., Connecticut’s) combine both approaches.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-main-differences-between-upfront-rebates-and-performance-based-payments-for-battery-storage/
