California Energy Commission to consider increasing offshore wind megawatt planning goals
The California Energy Commission (CEC) will consider increasing its maximum feasible offshore wind megawatt planning goals in a July 13 business meeting.
Seth Hilton, partner in the San Francisco office for the Stoel Rives law firm, explained to NPM that the CEC is required under Assembly Bill 525 (AB 525) to come up with target offshore wind planning goals for 2030 and 2045.
On June 27, the CEC held a workshop to evaluate the megawatt planning goals and other challenges offshore wind faces in California, such as transmission. The topic of potentially increasing megawatt planning goals came after the CEC issued its draft Offshore Wind Energy report on May 6, which showed capacity feasibility of 3 GW in offshore wind generation.
However, since the draft report was released, the CEC received a “significant number of public comments” recommending higher offshore wind megawatt planning goals, according to the CEC.
When asked if some of these comments were spurred by further unsolicited proposals on floating offshore wind, John Romero, public affairs officer for BOEM’s Pacific Office, told NPM no.
“I haven’t seen additional companies come forward, but the Proposed Sale Notice (PSN) public comment period is still open,” he said, adding that this is also serving as a last call for companies who want to participate in the upcoming offshore wind lease auction. “They have to be legally, financially and technically qualified to hold an offshore lease for wind energy development and that takes some time, so this gives industry members a last call and BOEM to do that qualification assessment.”
As for the comments submitted to the CEC, Hilton said they pointed to several studies since the draft report was issued that estimated higher capacity and planning goals, but that, “I don’t know if the (CEC) will change those expectations.”
During the workshop, Hilton said there was a lot of discussion around the reports and analyses that the CEC relied on during its draft report.
“The original target was for 3 GW for 2030 and 10 to 15 additional GW by 2045, but we don’t know if the CEC will revise,” he said, and explained that the purpose of these goals is to lay out a target or roadmap for the development of offshore wind and “get its arm around how much should be developed moving forward.”
The draft report was intended to set the target, as required by AB 525, and finalize those targets at the end of June.
“They failed to meet that deadline,” Hilton said. “I think what happened is they issued a draft report, had a workshop mid-May, and got a massive number of comments, including references to subsequent studies. Out of an abundance of caution, the CEC took some additional time to review comments and new studies referred to and make sure they have the final targets correct.”
Transmission challenges
The CEC workshop also touched on transmission studies conducted by the California Independent System Operator (CAISO). During the June 27 workshop, CAISO stated that it conducts an annual tariff-based transmission process to assess needs and approve solutions for reliability, policy, and economic-driven transmission. For the first time, it issued its first 20-Year Transmission Outlook.
Hilton explained that the study is looking at what would be needed and what the potential cost might be for some of the transmission development.
“Unfortunately, it takes a long time to permit and construct transmission, especially if that transmission is going through more populated areas,” Hilton said.
Right now, procuring wind in the Morro Bay Wind Energy Area (WEA) would be somewhat easier due to transmission already established in the vicinity that would be sufficient to meet the 2030 goal. That is, if the Diablo Canyon plant is retired, in which case Hilton said, “there’s a lot of capacity and transmission infrastructure.”
But the Humboldt WEA sees more challenges and the estimated cost associated with that, Hilton said, could reach well into the billions of dollars potentially for transmission upgrades.
“I think that’s something else to keep an eye on, if we need additional transmission and ensuring that gets built in a timely manner,” he said.
Additionally, he sees another piece to the topics to watch is how the California Public Utilities Commission (CPUC) decides how offshore wind resources are procured.
“I think one challenge here is given the capacity available offshore, there’s a number of options of who will purchase the capacity,” he said, pointing out that one utility won’t be able to purchase all of the generation capacity or even most of it. “California has a lot of fragmented Load-Serving Entities (LSEs) due to the CCAs and there are outstanding questions on procurement and what it might look like.”
Right now, he said the CPUC is considering procurement of offshore wind in its Integrated Resource Plan (IRP) proceeding where it has discussed possibly using a central procurement to procure the offshore wind.
“That’s certainly an option,” Hilton said.
Once the CEC makes its final decision on July 13 regarding the offshore wind planning goals, Hilton said much of the focus will then shift to the U.S. Bureau of Ocean Energy Management (BOEM) offshore wind lease auction and how it progresses.
BOEM’s California offshore wind lease auction
Romero told NPM that the state’s first offshore wind lease auction is still expected to be held later this year for two WEAs: Humboldt and Morro Bay.
“We don’t have an official date,” he said of the lease sale. “That detail will be spelled out in our Final Sale Notice (FSN).”
The FSN won’t be issued until the environmental assessment (EA) is completed on the Morro Bay WEA, which is ongoing. However, the EA is complete for the Humboldt EA.
“Before we come out with the FSN, we want to socialize what we think a lease auction will look like, setting general areas that might be suitable for leasing, and looking at the actual bidding values,” he said. “So, we are looking at a framework where a company comes in with the most money, gets the lease.”
He explained that BOEM is also considering a combination of that, or what is called a ‘multi-factor’ lease auction that would give companies certain credits or percentages that would go toward the value of their bid.
The comment period for the Proposed Sale Notice (PSN) is still open but closes August 1. So far, Romero said there has been “quite a bit” of interest in bidding credits. Additionally, there have been local communities who asked for value to be placed on community benefit packages.
“We’re working as fast as we can to make the lease auction in the late fall timeframe,” he said.
*This story was originally published exclusively for NPM subscribers last month.
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