SoCalGas applauds CPUC’s biomethane incentive reservation system

By Erin Voegele | February 18, 2020

Southern California Gas Co. on Feb. 13 announced its support for the California Public Utilities Commission’s new incentive reservation system for its biomethane monetary incentive program, which opened Feb. 3.  

According to the CPUC, the biomethane monetary incentive program provides up to $3 million for non-dairy clusters and $5 million for dairy clusters that successfully interconnect with the natural gas pipeline system and operate by Dec. 31, 2026. The program was designed to encourage biomethane producers to design, construct, and safely operate projects that interconnect and inject biomethane into California’s natural gas utilities’ pipeline systems. The program launched in 2015 and was initially authorized $40 million for incentives of up to $1.5 million per project for projects that successfully interconnected and were operational by June 11, 2020. Incentives are paid by the gas utility that operates the pipeline system where the facility interconnects. The program was later expanded to its current incentive levels and extended through the end of 2026, or until all available program funds are expended, whichever occurs first.

SoCalGas currently estimates there is approximately $32 million in funding available through the incentive program. The money is available for eligible projects on a “first come, first served” basis through Dec. 31, 2026, or until the money runs out.

A decision issued by the CPUC in December implements an incentive reservation system for the biomethane monetary incentive program. According to the CPUC, the incentive reservation system allows project developers to reserve incentive funds during the development phase of a project and receive the funds once the project is interconnected and operating. The CPUC said applications for the incentive reservation system are designed to ensure that only viable projects can service a spot on the reservation list. The CPUC also said it will maintain the incentive reservation system and make it publicly available to promote the transparency of the use of funds.

Documents published by the CPUC notes that several parties active in the biogas sector are supportive of a reservation or queue system. These groups include the Bioenergy Association of California, DTE Biomass Energy, California Association of Sanitation Agencies, Climate Resolve, Clean Energy, Agricultural Energy Consumers Association, SoCalGas and Sand Diego Gas & Electric Co., East Bay Municipal District, Harvest Power, Dairy Cares, DVO Inc., California Natural Gas Vehicle Coalition, and Maas Energy Works Inc. “Most supporting parties stated that in incentive reservation system would provide certainty for developers in securing the limited amount of incentive funds, and thereby enable better financing of dairy digester projects,” the CPUC said in its decision document.

SoCalGas said the new reservation system is an important step to give biomethane developers certainty the money they applied for will be there at the end of the project. The utility also noted the reservation system can help spur additional interconnection projects.  

"SoCalGas commends the CPUC for establishing an incentive reservation system," said Sharon Tomkins, vice president of strategy and engagement and chief environmental officer for SoCalGas.  "It is my hope that state policymakers will realize the increased demand for renewable natural gas projects and make additional incentive funding available for many years to come."

According to a notice posted by the CPUC, preliminary reservation applications have been received and are being evaluated. Additional updates are expected soon. The interconnection incentive reservation program application form is available on the PG&E, SoCalGas, SDG&D and SWG websites. Additional information is available on the CPUC website