Reuters: US Offshore Wind 2021 Conference

The Story So Far and a Path Forward

Laying the groundwork for the discussion, Sean began by asking the panel for their thoughts on the trajectory of offshore wind power in California, including progress made so far and the road ahead. California State Assembly Member David Chiu explained that offshore wind has been an area of interest in the Golden State for a number of years, but progress is closely tied to coordinated action across a myriad of regulatory stakeholders at the local, state, and federal levels. David spoke about his work in authoring Assembly Bill 525, a piece of legislation aimed at spurring regulatory cooperation and putting in place a roadmap for developing an offshore wind generation industry at scale in California. The bill was passed by the California State Assembly later that day. David added that the target under Assembly Bill 525 was for the state to scale at 10 GW or more of offshore wind energy by 2040, identifying the United States East Coast’s 29 GW of state-mandated targets as a point of comparison.

Karen Douglas, Commissioner of the California Energy Commission, pointed out other policy initiatives slated towards supporting the development of California offshore wind. Among these was Governor Gavin Newsom’s California Comeback Plan, which proposes funding for the specific purpose of bolstering offshore wind, in addition to the more generalized objective of helping the state to meet its renewable energy goals under Senate Bill 100 (including a transition to 100% clean, carbon-free electricity by 2045). Necy Sumait, Chief of Renewable Energy for the Pacific Region at BOEM, likewise highlighted an agreement between California and the federal government reached two days earlier on May 25^th that effectively gave the go-ahead for development of offshore wind projects in areas near California’s Central and North Coasts. The agreement authorizes BOEM to move forward with environmental analyses on sites such as a 399-square-mile area off Morro Bay in the Humboldt Call Area of California’s Central Coast, following preliminary work done by the agency in 2018 that yielded nominations of interest from fourteen companies interested in leasing sites for offshore wind ventures. According to Necy, BOEM will likely pursue the Central and North Coasts in parallel, and will plan to have an auction for California offshore wind call areas by mid-2022. The agreement was received as a cause for celebration by a number of panelists. Per Karen: “We are now past the stage of wondering what this could look like, and into the stage of having a pretty high degree of certainty that our first step is this [Morro Bay 399 Area], and we’ve got to work hard to understand and to facilitate the steps that need to be taken in [that area].” Michael Olsen, Senior Director of Business Development at Equinor, added, “The stars have aligned. We now have a tremendous amount of support for offshore wind by the Biden-Harris administration.”

Paula Major, Vice President of US Offshore Wind at Mainstream Renewable Power, shared the panel’s sense of optimism for the future of offshore wind in California, but urged the importance of dreaming bigger. She acknowledged that a 10 GW goal by 2040 was a great starting point for California, but considered this figure relative to the state’s estimated technical offshore wind resource potential of 112 GW, in addition to the UK’s target of 40 GW of offshore wind by 2030 and Europe’s goal of 300 GW by 2050. “When we look at US ambitions as a whole, they’re quite conservative in comparison.” In making the case for a still greater foray into this area, Paula added, “We have to remember the technical benefits of offshore wind. It’s relatively consistent, it complements the solar production profile on the demand curve, and it has the added benefit of wildfire de-risking if we build transmission offshore.”

Overcoming Challenges

Sean then directed the panel to discuss some of the challenges to developing California offshore wind, pointing to transmission infrastructure and stakeholder outreach as key issues. On the topic of transmission, Karen stated that, for the first tranche of potential developments off the Central and North Coasts, major transmission upgrades would not be necessary. “Bigger transmission questions come when you start looking at larger numbers from the North Coast,” Karen remarked, adding that she nonetheless believes that the state will have time to handle these hurdles. Paula viewed the issue of transmission as something of an opportunity, advocating for the development of a high-voltage, direct current system and integration at the national, regional, and state levels. As for stakeholder outreach, Necy explained that BOEM’s Renewable Energy Task Force hosts conferences to gather input from all levels of government. These efforts have been coupled with over a hundred meetings between the California state government and non-governmental entities. As Karen put it, “It’s really essential to meet our different stakeholder groups where they are and to have these focused conversations.” On the developer side, Michael likewise stressed the importance of engaging with stakeholders. “We have a significant role to play to meet with, speak with, [and] listen to those key stakeholders both outside the government [and] inside government so we can co-exist, because that’s what we want. This is about coexistence, not coming in and pushing others aside.”

Wind Economics

Sean thereafter called the panel’s attention to the financing and economics of offshore wind in the Golden State. He emphasized the central role that the California Public Utilities Commission would play in this area, a sentiment that was shared by the panel. Karen also acknowledged an encouraging trend of decreasing costs for fixed-bottom and floating offshore wind energy, and referred to an initial study showing that 10 GW of offshore wind would likely save the state a substantial amount of money. According to Karen, the case for offshore wind (and resource diversity in general) is made stronger by the fact that, beyond a certain point, adding more solar energy into a power system also entails increased spending on storage. Nonetheless, Karen noted that the broader implementation of Senate Bill 100 will be crucial for gauging the overall value of offshore wind in California’s system. “Offshore wind has a value proposition that definitely helps to justify the fact that it will have a higher cost. The issue is going to be to look at what the costs would be compared to alternatives, and at what scale.”

Adding on to the conversation, Michael spoke about the technological viability of floating offshore wind and underlined the importance of showing investors and developers a steady pipeline of offshore wind projects, as opposed to a one-off scenario. Paula similarly remarked on the importance of achieving economies of scale in order to drastically reduce the cost of offshore wind energy, bringing into focus one of the greatest advantages of larger-scale projects. According to Karen, the state has not yet taken a position on the larger- versus smaller-scale debate, but current transmission constraints mean that developments in the near term are expected to be in the 100-150 MW range. When it comes to the potential development of larger-scale projects further in the future, however, Sean seemed to voice at least a majority of the panelist’s wishes: “In my mind, I think this will happen. I think it’s just a matter of time.” Following up on this comment, David emphasized California’s very real need to embrace offshore wind, irrespective of project size. “In recent years, we have been experiencing every year heat waves, wildfires, rolling blackouts – the alternative of what happens if we don’t figure out more stable forms of clean energy.”

For more information on the Reuters: US Offshore Wind 2021 Conference visit here.