California’s SDG&E eyes up ITC for 200MW BESS portfolio

LinkedIn
Twitter
Reddit
Facebook
Email
DNV
Luna, a California battery storage project that went online during Q3 last year. Image: Leonardo Moreno via LinkedIn.

Californian investor-owned utility San Diego Gas & Electric (SDG&E) is seeking tax credits under the Inflation Reduction Act (IRA) for its upcoming energy storage projects, which it said would enable it to reduce electricity rates for its customers.

Four utility-scale battery energy storage systems (BESS) totalling around 200MW output and four energy storage microgrid projects of a total 39MW will be put forward for the credits, SDG&E said. The Investment Tax Credit (ITC) which the company is pursuing offers a 30% credit to renewables projects built in the US, and under the IRA was expanded to include standalone energy storage assets.

This article requires Premium SubscriptionBasic (FREE) Subscription

Enjoy 12 months of exclusive analysis

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Annual digital subscription to the PV Tech Power journal
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

“By investing in energy storage, we are helping to improve the reliability of the power grid, advancing the clean energy economy and providing some much-needed financial relief to our customers,” said SDG&E CEO Caroline Winn. “Securing federal tax credits for these storage assets is a key part of SDG&E’s affordability strategy to reduce energy costs while improving climate resiliency.” 

SDG&E said that it will be claiming the credits on the selected eight projects in 2024, which could result in roughly US$215 million in savings for its customers across California from 2025. It explained that for every US$100 million in price reduction for projects, end consumers see a ~3% reduction in electricity rates.

The ITC also includes a domestic content tax adder, which would provide project developers with an additional 10% credit if their projects are built with at least 40% of the material cost coming from US-made products. Energy-storage.news spoke with industry representatives who described the guidance on domestic content as ‘aggressive’, particularly the requirement for manufacturers to disclose the entire component-by-component cost of their storage systems to qualify.

Our sister site, PV Tech Premium, examined the domestic content adder as it applies to the Solar PV industry.

Last year, SDG&E released a study showing that California would need to quadruple its energy storage capacity by 2045 if it is to hit its decarbonisation targets.  Earlier this month, the utility commissioned two BESS projects totalling 171MW in San Diego and Imperial Valley counties.

California’s main grid operator CAISO recently highlighted that it has surpassed 5GW of energy storage deployments on its network as the state works to meet growing demand for electricity amid retirements of thermal generators, and reach its renewable energy and net zero targets.

11 November 2025
San Diego, USA
The 2024 Summit included innovative new features including a ‘Crash Course in Battery Asset Management’, Ask-Me-Anything formats and debate-style sessions. You can expect to meet and network with all the key industry players again in 2025 from major US asset owners, operators, RTOs and ISOs, optimizers, software and analytics providers, technical consultancies, O&M technology providers and more.

Read Next

April 30, 2025
NYSERDA has launched a programme to incentivise residential and retail energy storage in the state, offering a total of US$775 million for energy storage projects.
April 29, 2025
A panel discussed the impact of CAISO’s interconnection reforms at last month’s Energy Storage Summit USA 2025 in Dallas.
April 28, 2025
Flow battery startup Quino Energy and developer Long Hill Energy Partners have been awarded US$10 million in grant funding by the California Energy Commission (CEC) to support a 8MWh flow battery energy storage system (BESS) project in Lancaster, California, US.
April 28, 2025
Trina Storage has partnered with system integrator FlexGen on a 371MWh battery energy storage system (BESS) project for developer SMT Energy in Houston, Texas, US.    
April 28, 2025
Australian energy infrastructure company Jemena has switched on two new 400kWh community batteries in Bellfield and Coburg in Victoria, Australia.

Most Popular

Email Newsletter