What the Passage of AB 205 Means for California

On June 30, 2022 Governor Newsom signed Assembly Bill 205 (“AB 205”), which contains a variety of energy measures, including creating a “Strategic Reliability Reserve” to be used during extreme events when the State’s grid is especially taxed, as well as expanding the California Energy Commission’s (“CEC”) siting authority to include additional types of generating facilities. These include solar and onshore wind projects with a capacity of 50 MW or more; energy storage facilities with a capacity of 200 MW hours or more; powerplants using any source of thermal energy, with a generating capacity of 50 MW or more, excluding fossil- or nuclear-fueled plants; and transmission lines carrying electricity from any of those types of facilities to the first point of interconnection.

In expanding the CEC’s siting authority, AB 205 allows those proposing to construct any of those types of facilities mentioned above (solar, onshore wind, nonfossil-fueled powerplants with a generating capacity of at least 50 MW, energy storage systems capable of storing 200 megawatt hours or more of electricity, or transmission lines from those generating or storage facilities to a point of junction with an interconnected electrical transmission system) to file an application for certification (“AFC”) with the CEC on or before June 30, 2029.

  • The CEC will be required to review and make a determination on the AFC within 270 days.
  • The CEC would be the designated lead agency for purposes of CEQA analysis of the certification decision, with review and input from relevant local governments as well.
  • The CEC is given exclusive authority to certify a site and related facility and the associated environmental impact report, whether the application proposes a new site and related facility, or a change or addition to an existing facility.

The other major component of AB 205, the aforementioned “Strategic Reliability Reserve,” is intended to operate on top of and after procurement by load serving entities, including local publicly owned utilities, and does not modify or reduce utilities' obligation to meet established reliability requirements. The Strategic Reserve will be comprised of new emergency and temporary generators, new storage systems, clean generation projects, and funding an extension of existing generation operations, if any occur. The Department of Water Resources (“DWR”) is directed to, in consultation with the CEC, implement projects, purchases, and contracts to facilitate the Strategic Reliability Reserve, and the agency will be required to prioritize investments in “feasible, cost-effective zero-emission resources, and then feasible, cost-effective conventional resources” for this last-resort Strategic Reserve.

AB 205 also tasks the CEC with establishing and implementing a “Long-Duration Energy Storage Program” to provide financial incentives for projects that meet certain eligibility requirements outlined in the bill. The CEC is directed to prioritize projects that accomplish one or more of the following:

  • Increase the reliability and resiliency of the electrical grid;
  • Add electrical grid services when the grid is stressed or anticipating pending energy challenges;
  • Increase the use of renewable energy and reduce the impact of climate change on the electrical grid or on connected facilities or communities, including by improving air quality, reducing GHG emissions, or providing under-resourced communities with increased reliability and resiliency;
  • Lower energy costs and provide employment opportunities for residents of under-resourced communities;
  • Will interconnect and be commercially operational by 2028.

Other provisions of AB 205:

  • Appropriates nearly $1.2 billion to address customer arrearages through the California Arrearage Payment Program (“CAPP”).
  • Provides $200 million in funding for the CEC to establish a new distributed energy resources program to serve as on-call emergency supply or load reduction for California’s grid during extreme events. These funds are intended to be allocated for:
    • Efficiency upgrades, maintenance, and capacity additions to existing power generators;
    • Deployment of new zero- or low-emission technologies, including fuel cells or storage, at existing or new facilities.
  • Creates the Demand Side Grid Support Program to incentivize dispatchable customer load reduction and backup generation operation as on-call emergency supply and load reduction.
  • Projects covered under AB 205 will be required to pay prevailing wages for all construction work.
AB 205 does not change the California Public Utilities Commission’s (“CPUC”) jurisdiction. The CPUC has the power to issue certificates of public convenience and necessity (“CPCN”) for facilities proposed by utilities the agency regulates. The California State Lands Commission also retains its authority to require leases and receive lease revenues when applicable. The existing powers of the California Coastal Commission, the San Francisco Bay Conservation and Development Commission, the State Water Resources Control Board, and regional water quality control boards and air quality management districts also remain unchanged by this bill.

For more information, contact Brian Biering.