AB1095 - Data centers: waste heat energy.

Amended IN Assembly April 21, 2025 Amended IN Assembly March 25, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 1095 Introduced by Assembly Member Papan February 20, 2025 An act to amend Section 399.12 of, and to add Section 399.34 to, the Public Utilities Code, relating to the California Renewables Portfolio Standard Program. 63048.93 of the Government Code, relating to energy, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 1095, as amended, Papan. California Renewables Portfolio Standard Program: waste heat energy. Data centers: waste heat energy. The Bergeson-Peace Infrastructure and Economic Development Bank Act establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governor’s Office of Business and Economic Development, governed by a board of directors. The act, among other things, authorizes the I-Bank to make loans, issue bonds, and provide financial assistance for various types of projects that qualify as economic development or public development facilities. The Climate Catalyst Revolving Loan Fund Act of 2020 authorizes the I-Bank, under the Climate Catalyst Revolving Loan Fund Program, to provide financial assistance to any eligible sponsor or participating party in connection with the financing or refinancing for eligible climate catalyst projects, as defined, either directly to the sponsor or participating party or to a lending or financial institution, as specified. The act, beginning in the 2021–22 fiscal year, requires the I-Bank to adopt a climate catalyst financing plan, as specified, after meeting and conferring with prescribed authorized consulting agencies concerning specific categories of climate catalyst projects. The act establishes the Climate Catalyst Revolving Loan Fund as a continuously appropriated fund for the purpose of implementing the objectives and provisions of the act. This bill would authorize the I-Bank to provide financial assistance in connection with the financing or refinancing of an additional category of climate catalyst projects, those projects that enable the capture and conversion of data centers’ waste heat, with the State Energy Resources Conservation and Development Commission (Energy Commission) as the consulting agency. If multiple projects seek funding under this category of climate catalyst projects, the bill would require the consulting agencies to prioritize funding based on state policy and on financial considerations, as determined by the Energy Commission. By expanding the purposes for which moneys in the fund may be expended, the bill would make an appropriation. Existing law vests the Public Utilities Commission with regulatory jurisdiction over public utilities, including electrical corporations, while local publicly owned electric utilities are under the direction of their governing board. The California Renewables Portfolio Standard Program requires the commission to establish a renewables portfolio standard requiring all retail sellers, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, so that the total kilowatthours of those products sold to their retail end-use customers achieves 25% of retail sales by December 31, 2016, 33% by December 31, 2020, 44% by December 31, 2024, 52% by December 31, 2027, and 60% by December 31, 2030. The program additionally requires each local publicly owned electric utility to procure a minimum quantity of electricity products from eligible renewable energy resources to achieve the procurement requirements established by the program. This bill would require that a data center, as defined, that generates waste heat energy, as defined, be eligible to receive renewable energy credits under the program for that waste heat energy if specified conditions are met, including that the waste heat energy is used at the same facility or location where the waste heat was generated, captured, and converted, as specified. The bill would also require that a data center that uses waste heat to provide heating for buildings be eligible to receive renewable energy credits pursuant to a metric, which the bill would require the State Energy Resources Conservation and Development Commission to develop, that awards credit based on the amount of energy usage avoided due to the use of waste heat for building heating, as provided. Digest Key Vote: MAJORITY Appropriation: NO YES Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 63048.93 of the Government Code is amended to read: 63048.93. (a) The bank is hereby authorized and empowered to provide financial assistance under the Climate Catalyst Revolving Loan Fund Program to any eligible sponsor or participating party either directly or to a lending or financial institution, in connection with the financing or refinancing of a climate catalyst project, in accordance with an agreement or agreements, between the bank and the sponsor or participating party, including, but not limited to, tribes, either as a sole lender or in participation or syndication with other lenders. (b) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 does not apply to any climate catalyst financing plan or any criteria, priorities, and guidelines adopted by the bank in connection with the Climate Catalyst Revolving Loan Fund Program or any other program of the bank. However, any climate catalyst financing plan shall be posted on the bank’s internet website in a conspicuous location at least 30 calendar days before a bank board meeting at which the climate catalyst financing plan will be considered for approval. (c) (1) Repayments of financing made under the Climate Catalyst Revolving Loan Fund Program shall be deposited into the appropriate account created within the Climate Catalyst Revolving Loan Fund. (2) The bank shall establish a separate account for each category of climate catalyst projects identified by each paragraph of subdivision (f). For purposes of paragraph (3) of subdivision (f), the Clean Energy Transmission Financing Account is hereby created in the Climate Catalyst Revolving Loan Fund. (d) (1) (A) Beginning in the 2021–22 fiscal year, the bank shall meet and confer with the consulting agencies concerning the specific categories of climate catalyst project corresponding to each agency as provided in subdivision (f). Thereafter, the bank board shall adopt, by majority vote of the bank board, a climate catalyst financing plan. Before the bank board meeting in which the bank board will first consider adoption of the financing plan, each consulting agency shall submit a letter to the bank board discussing any areas of support and any areas of disagreement with the financing plan under consideration. (B) Beginning in the 2023–24 fiscal year, adoption of a climate catalyst financing plan by the bank board shall authorize the bank to provide financial assistance and to use all financing authorities provided under this division in its implementation of a climate catalyst financing plan. (2) Following bank board approval, the climate catalyst financing plan shall be posted on the bank’s internet website. (3) If the bank board has not approved a climate catalyst financing plan, then a climate catalyst financing plan shall not be in effect until approved by the bank board. (e) (1) A climate catalyst financing plan shall remain in effect until superseded by a revised climate catalyst financing plan. Commencing the first fiscal year following adoption of the initial climate catalyst financing plan, and in each fiscal year thereafter, the bank shall contact each consulting agency to discuss potential revisions to the climate catalyst financing plan last approved by the bank board. Following each consultation, the bank board shall consider adopting, by majority vote, a revised climate catalyst financing plan reflecting any material revisions to the prior climate catalyst financing plan. (2) A modified climate catalyst financing plan shall only be considered for approval if no consulting agencies propose material revisions to the financing plan then in effect. (3) If the bank board does not adopt a proposed revised climate catalyst financing plan, the existing climate catalyst financing plan shall remain in effect. (f) Beginning with the 2021–22 fiscal year, the consulting agencies and corresponding areas of climate catalyst projects they will provide consultation on shall be as follows: (1) The Natural Resources Agency for climate catalyst projects that relate to sustainable vegetation management, forestry practices, and timber harvesting products. Eligible climate catalyst project categories include, but are not limited to, all of the following: (A) Clean energy production, except combustion biomass conversion. (B) Advanced construction materials. (C) Forestry equipment needed to achieve the state’s goals for forest and vegetation management treatments. (2) The Department of Food and Agriculture for climate catalyst projects that relate to agricultural improvements that enhance the climate or lessen impacts to the climate resulting from in-force agricultural practices. Eligible climate catalyst project categories include, but are not limited to, all of the following: (A) Onfarm and food processing renewable energy, including both electricity and fuels, and bioenergy, to be used or distributed onsite. (B) Energy, water, and materials efficiency. (C) Methane reduction projects, using best practice approaches consistent with state policy goals, excluding dairy digesters and biogas unless used or distributed onsite. (D) Energy storage or microgrids. (E) Equipment replacement. (3) (A) The State Energy Resources Conservation and Development Commission and the Public Utilities Commission for climate catalyst projects that are clean energy transmission projects. If multiple projects seek funding, the consulting agencies shall prioritize, based on state policy, potential projects that meet the conditions in subparagraph (B), and on financial considerations as determined by the bank. Eligible climate catalyst project categories in this paragraph shall comply with the conditions set forth in this paragraph, and include, but are not limited to, both of the following: (i) Clean energy transmission project infrastructure that is necessary to connect the transmission project into the applicable California balancing authority area. (ii) Other necessary technical elements of transmission infrastructure, including including, but not limited to, environmental planning, permitting, and preconstruction costs for a project. (B) The initial climate catalyst project or projects funded under this paragraph shall support the development of a new transmission line or transmission lines to deliver to the system operated by the Independent System Operator zero-carbon, firm electricity from new resources located in the Salton Sea region. (C) Eligible projects shall meet all of the following conditions: (i) Have at least one interconnection point within a California balancing authority area. (ii) The applicant or its affiliates have previously completed a transmission project in California. (iii) Will primarily deliver electricity to the Independent System Operator balancing authority area from clean resources located in identified resource areas that do not have adequate deliverability to a California balancing authority area. (iv) Support new high voltage, defined as 200 kilovolts or higher, transmission projects or upgrades of existing transmission lines and substations to high voltage that are consistent with the state’s reliability and greenhouse gas policy objectives. (v) Priority shall be given to transmission projects that have not already been approved through the Independent System Operator’s transmission planning process or projects that have not been recently studied in the Independent System Operator’s transmission planning process and found to be unneeded or uneconomical. (vi) Financial considerations as determined by the bank. (vii) Consistency with state policy as determined by the consulting agencies. (D) The bank shall not finance a project unless the entity completing the transmission project has entered into a project labor agreement that, at a minimum, meets the requirements of Section 2500 of the Public Contract Code and includes all of the following: (i) Provisions requiring payment of prevailing wages, in accordance with Article 1 (commencing with Section 1720) of Chapter 1 of Part 7 of Division 2 of the Labor Code, to all construction workers employed in the construction of the project and for enforcement of that obligation through an arbitration procedure. (ii) Targeted hiring provisions, including a targeted hiring plan, on a craft-by-craft basis to address job access for local, disadvantaged, or underrepresented workers, as defined by a relevant local agency. (iii) Apprenticeship utilization provisions that commit all parties to increasing the share of work performed by state-registered apprentices above the state-mandated minimum ratio required in Section 1777.5 of the Labor Code. (iv) Apprenticeship utilization provisions that commit all parties to hiring and retaining a certain percentage of state-registered apprentices that have completed the Multi-Craft Core preapprenticeship training curriculum referenced in subdivision (t) of Section 14005 of the Unemployment Insurance Code. (E) Consultation on a potential transmission project does not constitute approval of that project by the Public Utilities Commission or the State Energy Resources Conservation and Development Commission under their decisionmaking authority, if that authority exists. (F) Consultation on, or evaluation of, a transmission project by the bank does not indicate the bank’s approval. The bank shall consider the credit and financial aspects of the project before determining whether to approve and finance the project. (4) (A) The State Energy Resources Conservation and Development Commission or the Public Utilities Commission for climate catalyst projects to leverage federal financing funds that relate to projects that avoid, reduce, use, or sequester air pollutants or anthropogenic emissions of greenhouse gases as defined in Section 16513 of Title 42 of the United States Code, as amended. (B) Projects described in subparagraph (A) shall not be funded until the United States Department of Energy is able to finance projects that do not meet the criteria in Section 16513(a)(2) of Title 42 of the United States Code. This subparagraph shall become inoperative on July 1, 2024. (5) (A) The Governor’s Office of Business and Economic Development, Treasurer’s Office, State Energy Resources Conservation and Development Commission, California Environmental Protection Agency, State Air Resources Board, Public U [Text truncated for display. Full text available on Congress.gov.]