Dive Brief:
- A proposed decision from the California Public Utilities Commission, released Friday, suggests the state procure up to 7.6 GW of offshore wind capacity — and aim to have that capacity operational by 2037.
- In its draft decision, the CPUC determined a need for centralized state procurement of up to 10.6 GW of total nameplate capacity. The commission additionally recommended a maximum of 1 GW of enhanced geothermal systems, and 2 GW of two types of long-duration energy storage.
- The CPUC’s call for centralized procurement is “what folks have been waiting for on the West Coast,” said Theodore Paradise, a partner at K&L Gates who practices energy, infrastructure and resources law. “You've got the lease area, now somebody needs to sign a contract to say they're going to buy the power.”
Dive Insight:
“And that draft order was very clear that the utility counterparties in the state could not sit it out — they had to procure offshore wind, it was the state policy and it wasn't really a suggestion,” Paradise said.
That procurement policy went into effect last October, giving the commission the ability to “request that the Department of Water Resources procure electricity from diverse long lead-time resources on behalf of customers of all [load serving entities] under the Commission’s integrated resource planning purview,” the proposed decision noted.
The commission said that it had evaluated eligible resource types and determined a need for centralized state procurement for the 10.6 GW of nameplate capacity to be brought online between 2031 and 2037.
However, the proposed decision said that the DWR doesn’t have to procure all or any of those resources “depending on the reasonableness of prices offered by developers.”
“The specific resources were selected because they are technologies that present opportunities to help California achieve our greenhouse gas emissions reduction goals for 2045 and beyond, they represent emerging technologies that need to achieve economies of scale to bring costs down, and they are also not currently being procured by individual [load-serving entities] in significant enough amounts to achieve cost reductions,” the commission wrote.
The commission noted that Southern California Edison said this point was “questionable,” and argued that it is “unclear why customers should pay to transform an industry that is not commercially ready, given the many affordability pressures facing customers right now.”
This proposal from the CPUC comes after the California Energy Commission in June finalized its strategic plan for the development of offshore wind resources as the state aims to meet a goal of deploying 25 GW by 2045.
And in April, the California Independent System Operator proposed $6.1 billion in transmission projects geared mainly toward helping deliver offshore wind to customers.
Five California offshore wind leases were sold in a 2022 auction, but the deep waters off the coast will require the use of floating wind, making the state “the next technology front,” Paradise said.
“The good news is that California is going to be the beneficiary, as the U.S. offshore wind market has been in general, of development efforts around the world that come before the in-service dates for the California wind,” he said.
Paradise said that a mid-2030s goal for deploying 7.6 GW is “much more realistic” than a goal of “five gigawatts by 2030.” California is aiming to deploy between 2 GW and 5 GW by 2030.
In the proposed decision, the commission said that the “majority of the parties representing OSW interests support a 10 GW need determination for OSW development by 2035,” and added that “Vineyard, Golden State, and Equinor argue that because 10 GW is the full lease amount so far, it would send the strongest market signal that California wants to develop the potential.”
However, the 7.6 GW procurement determination “represents the full physical cap for Morro Bay and Humboldt [offshore wind] resource buildout from a transmission perspective,” the commission said.
Three of the state’s existing leases are near Morro Bay, and two are offshore Humboldt County. The Bureau of Ocean Energy Management plans to hold another auction offshore California in 2028.
Transmission, Paradise said, is the “biggest issue” that he sees facing floating offshore wind right now, due to the need for high-voltage cables that are engineered “to be able to move around a bit.”
“The thing about floating [offshore wind] is that while California would like to do as much as it can on the West Coast, and certainly the U.S. would like to do as much as it can on the West Coast, domestically — some of those components can be imported,” he said. “So in some ways, [port infrastructure] will not be the bottleneck. In my mind, it’s the technological maturity, the supply chain availability of what they need.”
