California governor signs law on centralized procurement system for clean energy resources

California Governor Gavin Newsom has signed a bill into law to establish a new centralized procurement system for clean energy resources, which industry experts say will put the state on a path towards its 25 GW offshore wind goal.

Assembly Bill 1373 gives the Department of Water Resources authority to act as a centralized procurement entity until Jan. 1, 2035. It also provides $6 million to support monitoring and research into impacts of offshore wind energy development.

"With the signing of AB 1373, Governor Gavin Newsom and the Legislature have shown that California is committed to leading on floating offshore wind and achieving the Golden State's goals for 100% renewables by 2045," Nancy Kirshner-Rodriguez, the Business Network for Offshore Wind's senior director of policy & outreach, said in an Oct. 9 statement. "This new centralized procurement for offshore wind will provide the path forward and shows a real commitment to advancing our industry needs including port development, supply chain businesses across the state, workforce investment, and training."

California set a goal in 2022 to deploy 5 GW of offshore wind by 2030 and 25 GW by 2045. The West Coast lease sale is the first that that will require floating turbine technology to develop.

"Offshore wind at scale will require a substantial investment in generation and transmission," said Morris Greenberg, senior manager with the low-carbon electricity team at S&P Global Commodity Insights. "In the event that markets do not incentivize these investments due to the costs involved, the state -- through DWR -- will contract for them."

Other offshore wind laws

Newsom also signed Senate Bill 286 accelerate the state-side offshore wind permitting process. The bill also mandates state agencies and key stakeholders come together to collaborate and develop the long-term game plan to deploy offshore wind infrastructure, according to Senate Majority Leader Mike McGuire.

In addition, Newsom signed SB 605, which requires the California Energy Commission to evaluate the use of wave energy and tidal energy to help meet the state's clean energy and pollution reduction objectives. It requires the commission to identify suitable sea space for offshore wave energy and tidal energy projects in state and federal waters with a written report due to the governor and the legislature by Jan. 1, 2025.

"We believe that wave energy has massive potential, and we will soon be demonstrating our pioneering technology at the Port of Los Angeles and showcasing that wave energy can be a significant force in combating climate change and powering our communities with clean, reliable energy sourced from the endless power of the ocean," Eco Wave Power Founder & CEO Inna Braverman said in an Oct. 9 statement.

AB 1373 history

The California Legislature passed AB 1373 on Sept. 14. Newsom and the legislature reached an agreement Aug. 31 on the infrastructure streamlining package to bring more clean electricity to the grid and streamline electric infrastructure projects, including amendments to AB 1373.

Existing law requires the California Energy Resources Conservation and Development Commission to adopt a biennial integrated energy policy report containing certain information, including an overview of major energy trends and issues facing the state, according to AB 1373's amendments.

"This bill would require, as part of the 2025 edition of the integrated energy policy report, the [State Energy Resources Conservation and Development Commission], in consultation with the Public Utilities Commission, to assess barriers to electricity interconnection and energization and provide recommendations on how to accelerate those processes, as appropriate," Assembly Member Eduard Garcia wrote in the amendment to AB 1373.

Existing law also establishes the Voluntary Offshore Wind and Coastal Resources Protection Program that is administered by the State Energy Resources Conservation and Development Commission to support state activities that complement and are in furtherance of federal laws related to the development of offshore wind facilities and requires the program to award funds to public and private entities through various mechanisms.

Offshore wind goals

The Biden administration set a US goal of 30 GW of offshore wind by 2030, and California could provide nearly 20% of that amount.

The first federal offshore wind energy lease auction in the Pacific region took place in December 2022 and drew competitive bids from five companies that totaled $757.1 million, exceeding the first lease sales in the Atlantic region.

The Bureau of Ocean Energy Management executed the five offshore wind leases in June.

The next phase in the process is the site assessment phase, which can take up to six years.