Clean Energy Procurement Agreement to Benefit Offshore Wind

Procurement is seen as essential to the future offshore wind in California as well other capital-intensive projects with long lead-times.

Governor Gavin Newsom and the legislature announced an agreement to advance AB 1373, which would authorize the state Department of Water Resources (DWR) to serve as a central procurement entity to procure “diverse, clean” energy resources until 2035. The plan looks to benefit capital-intensive projects with long lead-times such as offshore wind, geothermal power plants in the Imperial Valley, and long-duration storage in San Diego County. Newsom proposed a similar plan in June. (See Newsom Releases Clean Energy Transition Plan.)

The central procurement entity is intended to help the state meet its renewable and zero-carbon energy resources and reliability goals. Supporters of central procurement see it as critical to offshore wind, which is facing challenges to profitability from inflation, supply chain bottlenecks, and increasing financing costs. Offshore wind developers have not moved projects forward since the offshore lease auction in December 2022 and are waiting for California legislators to develop a procurement plan.

Additional Support

The law also provides other benefits for offshore wind developers. It would authorize the CEC to allocate funds to the Voluntary Offshore Wind and Coastal Resources Protection Program for workforce development grants. The legislation also requires that at least $6 million from the General Fund is available for the 2024-25 fiscal year to support comprehensive, regional baseline environmental monitoring and research into the impacts of prospective offshore wind energy development.

Offshore Permitting

The law would also state the intent of the legislature to appropriate additional resources for offshore wind permitting as required in SB 122. That law, a budget trailer bill, expresses the intent of the legislature that the administration conduct an assessment of offshore wind energy permitting and related resource needs across applicable state entities.

Accelerated Transmission Permitting

In addition to the central procurement of clean energy, the bill also accelerates permitting for electric transmission projects and strengthens the strategic reliability reserve to help prevent its misuse of the new Strategic Reliability Reserve. The agreement follows the recently signed infrastructure streamlining package that aims to accelerate construction timelines on the projects necessary to achieving the state’s clean energy goals. (see Newsom Signs CEQA Reform Bill into Law.)