Q & A on Offshore Wind California
1. Why Offshore Wind California? Why now?
America's offshore wind industry is taking off, with well over 40 gigawatts (GW) in commitments by East Coast states – where most projects are in shallower waters and use fixed-bottom foundations – and $109 billion in expected supply chain spending by 2030. Now, technology advances and declining cost are bringing floating offshore wind power to Europe and the Pacific Rim. It’s time for California − a renewable energy leader with one of the world’s best offshore wind resources in its deeper West Coast waters − to stake its claim to the benefits of offshore wind jobs, economic development, and competitive renewable power.
Offshore Wind California is a coalition of industry leaders that has joined forces to provide a dedicated voice, business expertise and innovative solutions to lead responsible development of offshore wind for California. California is a national leader on renewable energy with its commitment to 100 percent renewables by 2045. OWC wants to help the state meet that mark by also being a leader in offshore wind – and has encouraged California to “go big” on floating offshore wind, which the California Energy Commission (CEC) did in August 2022 when it adopted ambitious but realistic planning goals for the Golden State to generate up to 5 GW from offshore wind by 2030 and a nation-leading 25 GW by 2045.
These goals align well with the Biden Administration’s national goals to achieve 30 GW of offshore wind by 2030, 15 GW of floating offshore wind by 2035, and aim to reach a total of 110 GW by 2050. They are also supported by the state's 2021 joint agency report, which concludes that for California to reach 100 percent clean energy by 2045, it will need a diverse portfolio of renewable energy including offshore wind. The California Independent System Operator (CAISO) included 10 GW of offshore wind for transmission planning in its first-ever 20-year outlook, and indicated at the CEC’s June 27, 2022 Offshore Wind Workshop that it has examined additional resources off California’s North Coast that raise the total offshore wind potential CAISO has studied in its outlook to 21.1 GW
California has more than 200 GW of technical potential for offshore wind power, which will complement other clean energies and help ensure grid reliability and energy security with its steady power production and evening ramp-up, when it's more difficult to supply renewable power. It's time to make California a leader in floating offshore wind by moving forward with speed and scale on the essential next steps to deploy this clean energy resource – which include new investments in transmission and port infrastructure, a clear permitting roadmap, effective mechanism for procurement, robust supply chain, workforce training, and more offshore wind Call Areas to reach the state’s 25 GW goal.
2. What is OWC's mission and who are its members?
OWC's mission is to promote policies and public support for the responsible and sustainable deployment of offshore wind power off California's coast. Formed in October 2019, OWC is dedicated to public education and providing its industry insights and expertise to help advance this renewable resource as part of a comprehensive, diverse solution to meet California's energy needs and commitment to 100 percent renewable power by 2045. OWC's board member companies include BP, Equinor, Hexicon, Magellan Wind, Mainstream Renewable Power, Ørsted, RWE, Shell, SSE Renewables, and the nonprofit Pacific Ocean Energy Trust (POET).
3. What are the key milestones and next steps for enabling California's offshore wind industry?
In May 2021, the Biden Administration and Governor Gavin Newsom announced agreement on California sea space issues to enable development of an initial 4.6 GW of offshore wind off California's Central and North Coasts, at Morro Bay and Humboldt, which the federal Bureau of Ocean Energy Management (BOEM) designated as Wind Energy Areas (WEA) in the summer and fall of 2021.
In September 2021, California's Legislature gave bipartisan approval to and Governor Newsom signed the landmark AB 525 legislation, authored by Assemblyman David Chiu and supported by a broad coalition of industry, labor, environmental, and environmental justice groups. This new law advanced key provisions and a timeline for California to go big on floating offshore wind and responsibly develop this renewable energy resource as a major part of the state’s diverse clean power portfolio.
In August 2022, the CEC adopted the AB 525 law's first milestone, setting offshore wind planning goals of up to 5 GW by 2030 and 25 GW by 2045. These ambitious goals sent a strong signal that California is committed to moving forward to develop floating wind, with a large-scale, multi-gigawatt target that positions California as a leader in the U.S. and Pacific Rim, and a natural hub for supply chain, ports, and jobs.
In December 2022, BOEM conducted its first-ever auction for California offshore wind lease sales in federal waters, identifying five new provisional leaseholders for the initial Morro Bay and Humboldt WEAs, which are located 20-30 miles offshore on California’s Central and North Coasts, beyond the view of most shore dwellers.
By June 30, 2023, AB 525 directs the CEC to prepare a Strategic Plan for development of offshore wind in federal waters, involving all affected stakeholders and protecting the state's environmental and cultural resources.
A key to continuing this progress is growing awareness of the rapid advances in offshore wind technology and its strong economic case to play a key role as part of California's diverse new clean power portfolio. A major lesson of East Coast offshore wind is the value of economies of scale and significant state goals to lower price and spur competition. Understanding offshore wind's benefits − in jobs, economic growth, grid reliability, energy security, lower emissions, and competitive clean power − and what it takes to achieve them is critical to make that case.
To realize offshore wind's benefits and reach California’s multi-gigawatt goals, we must move forward expeditiously with the essential next steps to bring offshore wind online after BOEM’s initial lease sale in the December 2022. This includes developing a clear permitting roadmap and completing federal/state environmental reviews, upgrading transmission and port infrastructure, developing a robust supply chain, an effective mechanism for procurement, workforce training, and more offshore wind Call Areas to reach the state’s 25 GW goal, all while protecting wildlife, fishing, and cultural resources.
4. What is California's offshore wind power potential? What are its topline benefits?
The National Renewable Energy Laboratory (NREL) reports that California has an enormous 200 GW of offshore wind technical power potential, representing more than 250 percent of the state’s current electricity capacity. So 25 GW of offshore wind is just a fraction of the state's full technical potential. Yet its potential benefits for California are huge. Twenty-five GW of electricity from offshore wind is enough to supply 15-20 percent of the state’s total planned new clean-energy resources and power up to 25 million California homes.
With its around-the-clock power profile and high capacity factors, offshore wind will be an ideal complement to the state’s solar and other renewable resources, helping to ensure grid reliability and energy security by keeping the lights on and electric grid humming night and day. It will also create tens of thousands of good-paying jobs, save ratepayers at least $1 billion or more in installed clean power capacity, drive new domestic supply chains, and help California to meet its climate and clean energy goals.
5. Why is it important for California to set ambitious targets for offshore wind power?
OWC has encouraged and supported California in setting bold but realistic planning goals to generate up to 5 GW of offshore wind by 2030 and 25 GW by 2045. That's because several decades of offshore wind industry experience and academic study have demonstrated conclusively that “going big” is one of the most important keys to achieving success with this remarkable clean energy technology – in California and other U.S. and global energy markets. For offshore wind, economies of scale are essential to drive down costs, deliver competitively priced clean power, and encourage industries and jobs to locate in our state.
We’re seeing it on the U.S. East Coast, where states have made commitments to well over 40 GW of fixed-bottom offshore wind. And we’re seeing it in Scotland, which in January 2022 concluded lease auctions that will put 15 GW of floating offshore wind turbines in the water in the coming decade. These successes are all being driven by economies of scale and advances in wind turbine technology that are dramatically reducing costs, which can save ratepayers money while also cleaning up our environment.
California's energy customers will be well served by the state’s ambitious offshore wind goals, which are well within reach and represent only a small portion of the state’s full technical potential. They will position California as a floating offshore wind leader and hub for jobs, port infrastructure and other facilities to deploy this technology on the West Coast and beyond.
6. Who are California's energy stakeholders? Who coordinates federal and state offshore wind policy?
California has many energy stakeholders, including policy makers, power providers, environment and environmental justice advocates, labor unions, commercial/recreational ocean users, tribal communities, consumer advocates, and the broader public. OWC is committed to offering its industry expertise to raise awareness of offshore wind's value and enable its deployment as a key part of California's power portfolio.
BOEM oversees policies for federal waters where offshore wind power will be generated before transmission onshore to California’s grid. Since 2016, BOEM has coordinated state and federal offshore wind planning and permitting through the BOEM California Intergovernmental Renewable Energy Task Force, which works closely with the CEC. OWC has been working with this task force and state agencies on a range of issues to make offshore wind power in California a reality.
7. How important is offshore wind to help California achieve its renewable energy and climate goals by 2045?
Offshore wind offers an important complement that will help balance solar and other renewable resources on the state's energy demand and supply curves. It will ensure a diverse power portfolio to reach California's 100 percent renewables commitment by 2045 with reliable, low-cost electricity. The state's 2021 SB 100 joint agency report concludes that for California to reach 100 percent clean energy by 2045, it will need a broad range of renewable energy that includes offshore wind.
The urgency of this task is evident by the clear and present climate dangers facing our state and our planet. Recent wildfires and heat waves in California and the rest of the West, as well as extreme weather elsewhere in the U.S. and across the globe, underscore that the Earth is facing a climate emergency – not some time in the distant future, but now. Just as clear is the need to improve California’s grid reliability and energy security, to help residents avoid the kind of rolling power blackouts the state narrowly averted in September 2022. We need to move with speed, scale, and sustained federal and state support on the planning and deployment of offshore wind: our nation’s clean energy and climate future depend on it.
California has established itself as a leader with an impressive mix of renewables, primarily solar and onshore wind. But when the sun goes down, we still rely on peaker plants for as much as 60 percent of our electricity. More solar panels and storage capacity will help, but they are unlikely to scale fast enough to close the gap at an affordable price and assured grid reliability. California needs to procure a diverse portfolio of renewable energy including offshore wind. Offshore wind can deliver clean, reliable, utility-scale power for California’s grid night and day with proven technology that is deployed 20 miles or more out at sea, where it will have minimal visual and environmental impacts.
8. How many California jobs can offshore wind create? Business revenue? Ratepayer savings? Other benefits?
NREL reports that building 10 GW of offshore wind power in California would create 18,000 jobs by 2050, including 15,000 annual construction jobs and 3,000 long-term operations jobs. Another report, by the USC Schwarzenegger Institute, estimates that job gains from the development of 10 GW of offshore wind would total 97,000-195,000 job-years through 2040 for the construction of offshore wind facilities and another 4,000-4,500 annual operation and maintenance jobs, which translates into an additional 120,000-180,000 job-years of employment.
As California scales up to meet its offshore wind planning goals of up to 5 GW by 2030 and 25 GW by 2045, near-term investments and workforce planning will be essential to facilitate rapid build-out in future years. Responsible offshore wind development that incorporates local protections, community benefit agreements, and leasing bid credits will bolster California jobs, workforce development, supply chain growth and investment. An analysis by the Special Initiative on Offshore Wind estimates building 30 GW of offshore wind on the East Coast would generate $109 billion in supply chain business.
In addition, offshore wind will help boost state revenues from a strong green economy. NREL found installing 10 GW of offshore wind would generate $20 billion in GDP for California by 2050. For ratepayers, the SB 100 joint agency report found 10 GW of offshore wind would save $1 billion or more in installed clean power capacity. These and other benefits promise to scale up as the state moves towards its goal of 25 GW. Offshore wind will also help California meet its climate objectives by reducing greenhouse gas emissions, and improve environmental justice and health conditions for local communities by reducing the state's reliance on fossil-fueled power plants.
9. Why is offshore wind thriving on the East Coast but not yet California?
The simplest answer is the West Coast ocean floor is deeper than the East Coast, which means that California offshore wind will require anchored floating platforms to deploy offshore wind power. But technology progress has been rapid. Floating offshore wind platforms are now installed off Portugal, Norway, and Scotland that have very high capacity factors. It's time to bring this clean energy technology to California.
10. How quickly can floating offshore wind produce cost-competitive renewable power for California?
Offshore wind costs worldwide are declining dramatically, driven by technology and economies of scale. NREL projects that costs for floating offshore wind in California will decline to $53–$64/MWh by 2032. DNV reports that by 2050, floating wind will reach a levelized cost of energy of less than $40/MWh. In September 2022, the White House’s new Floating Offshore Wind Shot set a goal to deploy 15 GW of U.S. floating offshore wind and accelerate cost reductions for floating technologies by more than 70 percent by 2035.
Advances in technology – including floating platforms – are showing dramatic progress. As floating offshore wind moves from demonstration to full-scale projects by the mid-2020s, research and technology will be critical to unlock cost savings and economies of scale. Advances in technology will spur not just overall GWs from projects, but also efficiencies in component development, including floating substructures, dynamic cables, and wind turbine size, which is expected to exceed 15 MW per turbine when California projects are built. Trends continue to point downward for offshore wind as a low-cost renewable energy choice for California.
11. What new transmission investments will be required to connect offshore wind to California's grid?
All utility-scale power links to the grid, and OWC will work with stakeholders to address transmission needs. Transmission is one reason offshore wind is popular on the East Coast. It makes more sense to transmit power from offshore wind turbines close to load but far from view, rather than hundreds or thousands of miles overland across hard-to-access right of ways and state lines.
For California, a CAISO staff report indicates that up to 5-6 GW of existing interconnection capacity on the Central Coast will be available to provide transmission for up to 5 GW of offshore wind from the Morro Bay WEA − utilizing transmission at a retired gas plant and two nuclear generators at Diablo Canyon, which are due to retire in 2029 and 2030. Timing for this transition will be important. On the North Coast, offshore wind at the Humboldt WEA requires significant build-out of transmission to reach load centers further south, via undersea or onshore cables. In both areas, it’s crucial to begin necessary planning now so transmission upgrades and capacity are ensured and offshore wind can meet California’s goals of up to 5 GW by 2030 and 25 GW by 2045.
Transmission cost is an important factor in comparing energy options. Offshore wind gives California an excellent in-state renewable energy solution. In its first-ever 20-year outlook, CAISO studied more than 20 GW of offshore wind in its transmission planning strategies for the state.
12. What investments in port infrastructure are needed to enable floating offshore wind on California’s coast?
Adequate port infrastructure – for offshore wind assembly, construction, and maintenance – is essential to enable floating wind in California. With five ongoing port and waterfront studies and a $45 million commitment from the State budget, California is in the planning stages to assess and guide investments to upgrade port and waterfront facilities. The results of these studies, including the AB 525 Ports Assessment, will facilitate a multi-port strategy and enable domestic component manufacturing so port infrastructure can meet the needs of this dynamic new industry. Upgrades are underway for offshore wind deployment at the Port of Humboldt Bay, and the Port of Long Beach has proposed what would be the nation’s largest offshore wind assembly terminal.
13. How long will it take to bring California offshore wind online? Why is a permitting roadmap important?
Responsible deployment of floating offshore wind for California will require following federal and state permitting processes, governed by an array of laws, regulations and agency guidance. Many permits can be pursued concurrently but could take as many as 5-6 years to complete. So, it’s time to move forward on planning and permitting now. As required by AB 525, the CEC, California Public Utilities Commission (CPUC), California Coastal Commission, State Lands Commission, and other agencies are directed to coordinate and prepare a final permitting roadmap by June 30, 2023 that will provide greater certainty for completing environmental and other necessary reviews for offshore wind in an efficient, timely manner.
14. What does California need to ensure that offshore wind power can be procured at scale?
For offshore wind, economies of scale are essential to spur a sustainable industry, drive down costs, deliver competitively priced power, and encourage supply chain businesses and jobs to locate in state. Likewise, procurement at scale is critical to lower costs for load-serving entities and ratepayers and provide market confidence for developers. To achieve this – and ensure greater energy reliability and resource diversity – the state should pursue a more centralized procurement process for large-scale, long lead-time clean energies like offshore wind. In February 2023, Governor Newsom proposed a plan to set up a voluntary central procurement mechanism at the state’s Department of Water Resources for long lead-time clean energy resources.
15. How much will the new Inflation Reduction Act (IRA) Investment Tax Credits help California offshore wind?
In August 2022, Congress passed and the President signed the Inflation Reduction Act (IRA), which extends Investment Tax Credits (ITC), Production Tax Credits (PTC) and other measures for renewable energy projects and climate initiatives. For offshore wind in California, the law effectively extends the ITC with a phase out that begins in 2045, according to a September 2022 modeling analysis by the CPUC. This federal law could reduce the LCOE by up to 30 percent or more for California to move ahead with its planning goal to deploy 25 GW off the Central and North Coast, and save ratepayers billions of dollars over the life of the offshore wind farms.
16. How will offshore wind co-exist with California's environment, marine life and fishing industry?
OWC members have a strong record working with environmental stakeholders to safeguard marine life. This was demonstrated at the Block Island Wind Farm off the coast of Rhode Island, as well as other offshore wind projects underway on the U.S. East Coast and deployed in Europe. We'll continue to work closely with NGOs and policy makers to ensure floating wind has minimal impact and coexists well with marine life and other ocean users. OWC members have strong track records working with commercial fishing stakeholders. These issues have been part of the work of California agencies and the BOEM California Intergovernmental Renewable Energy Task Force.
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