ACP-CA Offshore Wind Insights

Molly Croll

This summer the California Public Utilities Commission (CPUC) faces an important decision on central procurement planning that will either send a strong signal to develop offshore wind energy at scale or jeopardize the state’s long-term clean energy and reliability goals.

In 2023, the state passed Assembly Bill 1373, establishing a central procurement mechanism to enable cost-effective power purchasing to build the state’s offshore wind market. Central procurement allows a single, dedicated buyer to contract for large-scale energy resources with long development timelines like offshore wind, providing market certainty and reducing risk to help the industry grow, reduce costs, and achieve economies of scale. The passage of AB 1373 signaled the Governor and Legislature’s desire to expand California’s toolkit to procure valuable diverse clean energy resources like offshore wind that are difficult for a single power provider to develop but are necessary to address ongoing reliability constraints and meet the state’s goals of 90% clean energy by 2035 and 100% clean energy by 2045.

As California plans for large-scale offshore wind energy, the responsibility to implement AB 1373 lies with the CPUC. To ensure the necessary buy-in and investment from the different elements of the offshore wind economy and a clear development pathway to deliver this resource at scale, it is crucial that the CPUC sets a course for procuring 10 gigawatts (GW) of offshore wind by 2035.

Why 10 GW by 2035? California needs to improve the diversity of its energy portfolio to address reliability and increased climate impacts, and offshore wind developers need a clear signal that there is a path to market to develop their lease areas and enable offshore wind market transformation and growth. Building just a couple of offshore wind projects will not provide the foundation to support the required infrastructure investments in ports or transmission, nor achieve the economies of scale needed to drive down costs for future projects. Planning for 10 GW by 2035 will solidify California’s commitment to building offshore wind at a large scale and the state’s continued leadership as the leader in growing clean energy technologies.

Setting a strong and clear central procurement need identified now is the fiscally responsible decision for California. Planning towards 10 GW by 2035 promotes affordability in the long-term by allowing costs to be shared more economically across load-serving entities as the offshore wind market grows. Central procurements complement other more short-term CPUC strategies to promote affordability such as electrification-driven load-growth and more equitable rate design. Ratepayers won’t pay a penny for offshore wind until it’s on the grid, and initiating large-scale procurement now will reduce costs when offshore wind comes online in the mid-2030s.

Offshore wind companies are counting on the CPUC to demonstrate California’s commitment to offshore wind energy as they approach big decisions to secure financing and advance plans to develop the state’s first large-scale projects. With the confidence afforded by planning towards 10 GW by 2035, California’s offshore wind market can scale to generate tens of thousands of good-paying jobs while setting California on course to achieve its 100% clean energy target.