California Sets Goals for Buildout of Offshore Wind

California officials have taken a major step toward establishing the state's offshore wind energy industry, setting a goal of installing as much as 5 GW of generation capacity this decade, and 25 GW by 2045.

The California Energy Commission (CEC) on Aug. 10 put out a report detailing the state's plan for offshore wind, which officials said is important to move California more quickly away from fossil fuels and support the continued buildout of renewable energy resources. Wednesday's report builds on information released by the CEC earlier this year.

The report outlines planning goals of 3,000 MW to 5,000 MW of offshore wind generation capacity by 2030, and 25,000 MW by 2045. Officials on Wednesday said offshore wind in particular is expected to provide clean energy production at night to complement the state's solar power industry.

The Inflation Reduction Act (IRA), recently passed by the U.S. Senate, and expected to pass the U.S. House and be signed by President Joe Biden, contains several incentives for offshore wind development. The IRA includes an energy investment tax credit (ITC) that provides a scaled tax credit of up to 30% for offshore wind projects that begin construction before January 1, 2026, which could add urgency to move projects forward in the next few years.

Committed' to Offshore Wind

These ambitious yet achievable goals are an important signal of how committed California is to bringing the offshore wind industry to our state," said David Hochschild, the CEC chair. This remarkable resource will generate clean electricity around the clock and help us transition away from fossil fuel-based energy as quickly as possible while ensuring grid reliability."

The CEC said the report was developed in coordination with federal, state, and local agencies, including stakeholders such as tribal governments, fisheries, and other ocean users. The report is the first of several items the CEC is preparing to create a strategic plan for offshore wind development. The plan is required by Assembly Bill 525, approved by lawmakers last year.

The energy group said Wednesday's report provides the latest available research on technical potential for the state's offshore wind industry.

The success of our state's climate goals requires all-hands-on deck and we are committed to ongoing consultation with other agencies and those most impacted by the scale-up needed to achieve 100% clean electricity," said CEC Vice Chair Siva Gunda. The group's next move is expected to be a study of the economic benefits of offshore wind in relation to seaport investments, along with workforce development needs.

Liz Burdock, president and CEO of the Business Network for Offshore Wind, in a statement to POWER on Aug. 7 after the Senate's passage of the IRA, said, The Senate's passage of the Inflation Reduction Act is a watershed moment in America's renewable energy transition. This historic legislative package sends a message to the world that the U.S. is serious about bolstering supply chain resiliency, increasing American energy security, and reaching our ambitious goal to deploy 30 GW of offshore wind power by 2030. The bill's $40 billion investment in domestic clean energy manufacturing and shipbuilding is an important down payment that will unleash the vast potential of offshore wind and localize a supply chain on American shores creating thousands of good-paying jobs."

Roadmap for Permitting

The CEC has said its staff also will create a roadmap for a permitting process for offshore wind energy installations, along with associated electricity and transmission infrastructure. The group's plan needs to be available to state lawmakers by June 2023.

California Gov. Gavin Newsom last year signed an agreement to open West Coast development of offshore wind. The Bureau of Ocean Energy Management, an agency of the Interior Dept. that oversees offshore U.S. energy development, in May of this year released a proposed sale noticefor offshore wind leases off the northern and central coasts of California, in areas designated as most suitable for commercial wind energy activities near Humboldt and Morro Bay. Work to prepare for offshore wind already is underway at the Port of Humboldt Bay, after the CEC earlier this year approved $10.5 million in funding.

Newsom's 2022-23 budget proposal for the state proposes another $45 million for upgrades at waterfront sites that would support offshore wind energy development.

Other incentives for offshore wind in the IRA include:

• A new tax credit of 10% for the domestic production of wind components and specialized offshore wind installation vessels.
• An expansion of the Outer Continental Shelf Lands Act. The expansion would include the exclusive economic zone of U.S. territories including Puerto Rico, Guam, and the U.S. Virgin Islands, allowing for development of offshore wind projects in those areas. The Act also says the Interior Dept. should evaluate applicable lease opportunities.
• A provision in the bill would put an end to the President Trump-era moratorium that currently prohibits federal leasing on the outer continental shelf off the coast of the U.S. Southeast.
• A $3 billion grant to install electrified equipment and reduce emissions at U.S. seaports. The grant would support infrastructure upgrades at those ports to back offshore wind supply chain development and management.

The IRA does impose some restrictions on the leasing process for offshore wind. The BOEM, for at least 10 years after the IRA is enacted, would not be allowed to lease wind development sites unless the agency held an offshore oil and gas lease sale in the previous year. The oil and gas lease sale would have to offer certain defined opportunities for fossil fuel development on the outer continental shelf.

-Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).

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