Policy Board of Directors
April 20, 2026
10:30 AM
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
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Truckee, CA 96161
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Welcome & Roll Call
Corrections or Additions
The Clerk will announce agenda corrections or proposed additions of emergency, urgency, or continued items, which will be acted on by the Board as provided in Section 54954.2 of the California Government Code.
1. Receive an update on the Residential Battery Rebate Program (RBRP) and provide staff direction to close the RBRP and transition to a Virtual Power Plant (VPP) program or, alternatively, to allocate an additional $3.7 million toward the RBRP
Adjournment
Staff Report Item 1
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, Chief Executive Officer
PREPARED BY: Christopher Cook, Director of Energy Programs SUBJECT: Receive an update on the Residential Battery Rebate Program (RBRP) and provide staff direction to close the RBRP and transition to a Virtual Power Plant (VPP) program or, alternatively, to allocate an additional $3.7 million toward the RBRP.
DATE: April 20, 2026
RECOMMENDATION:
Receive an update on the Residential Battery Rebate Program (RBRP) and provide staff direction to close the RBRP and transition to a Virtual Power Plant (VPP) program or, alternatively, to allocate an additional $3.7 million toward the RBRP.
BACKGROUND:
Batteries are a critical component of California’s transition to a clean and reliable energy system. As renewable generation increases, particularly solar, the ability to store energy during periods of abundance and discharge during peak demand hours is essential to reducing grid strain, lowering emissions, and maintaining reliability.
In establishing the Residential Battery Rebate Program (RBRP), the Policy Board sought to advance several key objectives:
Support battery adoption by reducing upfront costs for customers; Assist customers transitioning to the Net Billing Tariff (NBT), which incentivizes time-of-use energy management;
Encourage load shifting away from peak hours to reduce costs and emissions for all customers; and
1 Lay the groundwork for a future Virtual Power Plant (VPP) by increasing the number of eligible, grid-connected battery assets capable of coordinated dispatch.
To inform program development, 3CE issued a Demand Side Management Request for Information (RFI) in June 2023, followed by a Request for Proposals (RFP) in December 2023 for a behind-the-meter battery storage and demand response program. Based on those efforts, staff determined that the market was not sufficiently mature to support a cost-effective, fully integrated demand response program with third-party vendors. As a result, staff launched the RBRP as a simplified, near-term approach to advance battery deployment and customer participation in load shifting.
The RBRP provides incentives of $300/kWh (up to 26 kWh), with enhanced incentives of $500/kWh for customers enrolled in CARE, FERA, or Medical Baseline programs, and for customers electing to transition early from Net Energy Metering (NEM) to Net Billing Tariff (NBT) rates. The maximum rebate amount is $13,000. The program was originally expected to support approximately 400 installations annually, equating to roughly 5.2 MW of new storage capacity each year.
On September 18, 2025, the Policy Board approved a FY 2025–26 Energy Programs incentive budget that includes $1.5 million for the RBRP based on prior-year spending and an anticipated increase in demand.
In July 2025, the federal government announced the expiration of the Residential Clean Energy Tax Credit for battery storage systems effective December 31, 2025. This announcement was followed by a significant and sustained increase in customer demand, as customers sought to combine 3CE rebates with the federal incentive prior to its expiration.
As a result, the RBRP experienced participation levels far exceeding initial projections. By March 18, 2026, approximately $3.5 million in rebates had been paid, exceeding the program’s allocated budget by $2 million. In addition, a number of applications remained in process due to the program’s one-to-three-month processing timeline.
In response, staff stopped accepting applications on March 18, 2026.
DISCUSSION/ANALYSIS:
Measuring the RBRP’s performance against its original objectives reveals:
Battery Adoption: The program has supported 739 installed battery systems across 3CE’s service territory, significantly increasing residential storage capacity. NBT Transition Support: Enhanced incentives encouraged early transitions to NBT, with 129 participating customers electing to switch ahead of required timelines. 2 Load Shifting: Participating systems are delivering approximately 7.3 MWh of daily load shifting during peak hours (4–9 PM), contributing to reduced grid strain and emissions. VPP Readiness: The program has expanded the base of installed battery assets that could participate in a future VPP program.
Since the start of the program, participation has also included the following customer types:
CARE/FERA: 49 customers ($448,250)
Medical Baseline: 61 customers ($626,000)
While these outcomes demonstrate that the program has been effective in advancing distributed energy resources and engaging customers in energy management, that success has not been cost-effective and has not significantly avoided peak hour emissions.
Cost-Effectiveness Assessment
While the RBRP has met its programmatic goals, it has been less effective in providing cost reduction benefits to all 3CE customers through load shifting. Since the RBRP’s inception, approximately $5.2 million has been spent to achieve 7.3 MWh of daily load shifting. The cost of achieving load shifting is approximately $712,000 per MWh of daily peak load shift. This represents a significantly higher cost than other load shifting strategies, such as a pay-for-performance model. In short, the cost of achieving load shifting through upfront battery rebates is high relative to the system value currently realized by 3CE.
Staff originally projected a battery installation would provide roughly $2,062 value to all 3CE customers through avoided peak-hour energy costs over its useful life. Updating for the current market outlook, which avoided cost assumption drops to $1,089 in value. The RBRP’s cost effectiveness assumptions have been further reduced because the California Energy Commission (CEC) has not recognized the 7.3 MWh of daily load shift, and as a result, has not provided a reduction in 3CE’s Resource Adequacy (RA) obligation. Should the CEC provide a RA obligation deduction in recognition of the RBRP’s load modification impact, the value would increase by $1,758, which is also a reduction from staff’s original projection of $2,682. The reduction in this case is due to declines in Resource Adequacy (RA) market value.
These calculations demonstrate that while individual customers benefit significantly (the average rebate amount is greater than $7,000 per customer), the program delivers limited cost savings to the broader customer base relative to its expense.
Program Over-Subscription and Fiscal Impacts
3 Driven by the expiration of federal tax credits and strong third-party installer participation, the RBRP experienced rapid growth creating a significant budgetary overrun in the program. 3CE has already paid $3.5 million (approximately $2 million over budget) to participants under the program and an additional $3.7 million in applications have been submitted but not processed.
Customer Expectations and Program Terms
The RBRP Terms and Conditions make clear the program “is on a first-come, first-served basis until funding is depleted.” The Terms and Conditions further state that submission of an application does not guarantee funding and that 3CE reserves the right to discontinue the program at any time. Applicants acknowledge these terms during the application process.
Despite this, many customers with applications in process, expected to receive rebates, and the program pause has understandably resulted in customer inquiries and escalations. Staff have included a prominent banner on the website notifying customers of the pause and conducted outreach to installers and customers both before and after the program pause, including direct communication with affected customers.
The Path Forward: Transition to a Virtual Power Plant
The market and program experience now support a transition to a Virtual Power Plant (VPP) model.
Unlike one-time rebates, a VPP provides performance-based incentives tied to actual battery discharge, aligns customer compensation with grid value over time, and enables coordinated dispatch of distributed energy resources. Staff anticipate the VPP will provide a comparable benefit to battery enabled customers over the life of the battery, but will do so based on performance, delivering system-wide benefits to all customers, not just program participants. 3CE is actively developing a VPP program with a targeted launch in October 2026.
To ensure effective program design, staff will conduct targeted outreach to industry stakeholders, including roundtables with solar and battery installers, and a structured feedback process, including surveys and written comment opportunities. Engagement will be ongoing to identify barriers, customer preferences, and operational considerations. This process will ensure the VPP program reflects market conditions and supports broad customer participation.
4 Options for Board Consideration
Recommended Option: Direct staff to enforce the RBRP Terms and Conditions as designed, close the RBRP, and encourage submitted applicants to enroll in 3CE’s Virtual Power Plant.
Enforcing program terms and conditions creates a consistent, transparent, and fair program design that sets clear expectations for all customers. The RBRP terms and conditions make clear that funding is on a first-come, first-served basis and reserves the ability to close the program without obligation to applicants.
Here, enforcing the RBRP terms and conditions would limit the budget overrun to approximately $2 million, while preventing further budget overrun for a program that has proven inefficient in meeting its design goal of lowering costs for all customers.
Closing the RBRP, unfortunately, does not compensate the roughly 517 customers that installed batteries and submitted applications. Staff will prioritize those customers enrollment into 3CE’s VPP, which is anticipated to provide a comparable benefit over the life of the battery.
Summary of recommended option to close the program:
Limits total overrun to approximately $2 million
Preserves funding for other agency needs, including programs Promotes transition to VPP design which compensates customers for performance Provides future participation pathway for affected customers Alternative Option 1: Direct staff to close the RBRP to new applicants, allocate a maximum of $3.7 million in additional funds to pay all currently submitted applications at present incentive levels, and direct future interested customers to enroll in 3CE’s Virtual Power Plant.
While not recommended, the Board could direct staff to allocate no more than an additional $3.7 million to fund submitted applications at the current program levels while directing any future program interest to the pending VPP.
5 This approach deviates from the program’s terms and conditions but addresses the expectations of customers who completed battery installations and submitted applications without knowledge of the funding overrun. An additional $3.7 million in funding would result in a total budget overrun of $5.7 million. The budget overrun will be funded by reserves, limiting the agency’s ability to pursue other agency objectives such as scaled-deployment microgrid pilots, owned-asset management, or rate assistance efforts.
Future program interest will be redirected to the forthcoming VPP program.
Summary of Alternative Option 1:
Increases total overrun to approximately $5.7 million Reduces flexibility to meet other agency needs
Results in inconsistent application of agency terms and conditions Alternative Option 2: Direct staff to allocate a maximum of $3.7 million additional funds to pay current and future applications on a first-come, first-serve basis at reduced incentive levels.
While not recommended, the Board could direct staff to allocate no more than $3.7 million to pay current and future program applicants on a first-come, first-serve basis at reduced incentive amounts.
Reducing the incentive levels to cover 5 to 14 kWh of battery capacity at $150/kWh and $250/kWh for income-qualified customers and early NBT adopters (down from $300/kWh and $500/kWh) would compensate the customers identified in Alternative Option 1 at a reduced amount and would allow the program to remain open until the additional $3.7 million is expended.
Summary of Alternative Option 2:
Increases total overrun to approximately $5.7 million Reduces flexibility to meet other agency needs
Consistent administration of agency terms and conditions Reduced incentives may not meet customer expectations but marginally improve program’s cost-effectiveness
FISCAL IMPACT:
Recommended Option: Approximately $2 million total program overrun Alternative Options 1 and 2: Approximately $5.7 million total program overrun 6 Transition to the VPP program is not expected to create long-term funding constraints and will be incorporated into future program budgets.
CONCLUSION:
The Residential Battery Rebate Program has successfully advanced battery adoption, supported customers’ transition to NBT, enabled meaningful load shifting, and helped prepare the foundation for a Virtual Power Plant program. However, the program’s rapid growth and high-cost relative to system benefits make it unsustainable in its current form. Closing the program and transitioning to a VPP model represents a strategic evolution—one that builds on the program’s successes while delivering greater long-term value to all 3CE customers.
ATTACHMENT:
RBRP Terms and Conditions
7 Program Terms & Conditions
By submitting this application, APPLICANT agrees to the following terms and conditions:
1. APPLICANT must be a 3CE residential customer residing at an address within 3CE’s service territory.
2. APPLICANT agrees to release, indemnify, defend, and hold harmless 3CE and its agents, employees, and/or representatives from all claims, demands, and liabilities, including bodily injury claims, arising out of or in connection with the APPLICANT’s participation in the Program. Neither 3CE nor APPLICANT shall be liable to the other for incidental, special, punitive or consequential damages.
3. Submittal of this Application does not commit 3CE to any financial obligation to APPLICANT. 3CE will only commit to award funds to APPLICANT upon written confirmation that all program eligibility conditions are met and all required documents and information pertaining to this Application have been provided to 3CE. The Program is on a first-come, first served basis until funding is depleted.
4. 3CE reserves the right to discontinue the Program at any time for any or no reason and remove all available, non-reserved funds.
5. 3CE reserves the right to change the requirements and/or due dates.
6. 3CE reserves the right to consider factors other than those specified within this Application and to request additional information from APPLICANT that are pertinent to the Program.
7. 3CE reserves the right to reject any or all applications received in relation to the Program.
8. 3CE does not issue a 1099 for the rebate and 3CE cannot offer tax advice of any kind. It is APPLICANT’S responsibility to contact a tax professional regarding the taxability of the provided rebate.
9. APPLICANT agrees to remain enrolled in 3CE service for a minimum of 24 consecutive months following the battery purchase date.
10.Any dispute arising out of or relating to these Terms shall be governed by and construed under the laws of the State of California, without reference to its conflicts of law provisions. Any dispute, or claim arising out of relating to this Agreement, or breach thereof shall be venued in Monterey County.
8 11. These terms may be modified at any time in accordance with any legal or regulatory directive.
12.APPLICANT certifies that all information provided as part of this Application, including any attachments, are true and correct.
13.APPLICANT certifies that the installed battery system was purchased new and unused. Battery systems categorized as resale units, rebuilt, refurbished, or worn do not qualify under this program. APPLICANT must present proof of purchase, and any other requested documentation to 3CE in order to qualify. Battery system must be installed and utilized residentially in accordance with eligibility guidelines stated on the website at time of application submission.
14.APPLICANT certifies the following: I verify the battery system works, and I know how to operate it and maintain it in a safe and reliable manner. I agree to follow the Manufacturer’s operational instructions, specifications, obtain any requisite permits, consents and comply with relevant laws, regulations, and building codes and standards required to operate and install the battery system.
15.APPLICANT agrees to discharge at least 50% of battery system capacity daily between the hours of 4:00PM and 9:00PM for the life of the battery system.
16.APPLICANT agrees to enroll in Texture’s battery performance tracking program and remain enrolled for the life of the battery, or similar tracking system approved by 3CE. APPLICANT grants 3CE access and rights to data collected via the tracking system for purposes of research, evaluation, monitoring, and reporting. APPLICANT agrees to Texture’s or similar tracking system’s privacy and data collection policy in order to participate in the program.
17.APPLICANT certifies that APPLICANT has disclosed any additional funding anticipated or received to fund the battery system’s purchase and installation. 9