AB2516 - California Grid Manufacturing Initiative.

Amended IN Senate June 25, 2026 Amended IN Assembly April 13, 2026 Amended IN Assembly March 24, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 2516 Introduced by Assembly Member Petrie-Norris February 20, 2026 An act to add Article 8 (commencing with Section 12100.80) to Chapter 1.6 of Part 2 of Division 3 of Title 2 of, and to add Article 12 (commencing with Section 63049.80) to Chapter 2 of Division 1 of Title 6.7 of, the Government Code, relating to electricity, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 2516, as amended, Petrie-Norris. California Grid Manufacturing Initiative. Existing law establishes the Governor’s Office of Business and Economic Development (GO-Biz) within the Governor’s office and requires GO-Biz to serve the Governor as the lead entity for economic strategy and the marketing of California on issues relating to business development, private sector investment, and economic growth. Existing law creates within GO-Biz the Energy Unit to accelerate the planning, financing, and execution of critical energy infrastructure projects, as specified. This bill would require the Energy Unit, in coordination with other specified state entities, to establish the California Grid Manufacturing Initiative. The bill would require the Energy Unit to identify and procure determine and provide appropriate forms of state assistance to address identified delays with critical electricity grid components, as defined, and to incentivize new or existing in-state manufacturing of critical electricity grid components. components, and to provide support to joint procurement initiatives. This bill would require the Energy Unit to develop a process for each public utility, as defined, on or before January 1, 2028, and regularly thereafter, to submit a projection of its purchasing needs for critical electricity grid components for which the public utility has not entered into a purchase agreement and for which the public utility affirmatively seeks the assistance of the Energy Unit in coordinating resources and leveraging purchasing power. The bill would provide that, if the Energy Unit determines that centralized procurement is warranted for a critical electrical grid component, a participating public utility may, prior to the issuance of a solicitation by the Energy Unit for that component, submit to the Energy Unit the conditions under which the public utility commits to purchase those components from the initiative, as provided. Under the bill, if a procurement by the Energy Unit satisfies the conditions submitted by a public utility, the public utility’s commitment to purchase the component from the initiative would be binding, as provided. By imposing new duties on local publicly owned electric utilities, the bill would impose a state-mandated local program. This bill would require the Public Utilities Commission, as soon as practicable, and in consultation with the State Energy Resources Conservation and Development Commission and the Independent System Operator, to develop a process to identify critical electricity grid components and to assess the statewide need for critical electricity grid components for the next 10-year period. The bill would require the assessment to include identification of specific strategies to reduce delays and ratepayer costs associated with the procurement of critical electricity grid components. The bill would require the Public Utilities Commission to determine, for each critical electricity grid component, whether requiring electrical corporations to engage in the joint procurement of the critical electricity grid component would further the purposes of the bill, and if the commission makes that determination, and also determines that electrical corporations would benefit from the joint procurement, the bill would authorize the Public Utilities Commission to require electrical corporations to engage in a joint procurement to fulfill the projected purchasing needs of each participating electrical corporation for the critical electricity grid component, as provided. This bill would require electrical corporations that are required to engaged in a joint procurement pursuant to the bill to, not more than 12 months following the imposition of the requirement, take certain actions, including engaging in a joint cooperative process for the sourcing and negotiation of joint purchase agreements for the purchase of critical electricity grid components. This bill would authorize the Energy Unit to issue requests for proposals or other competitive solicitations to procure critical electricity grid components, as provided, and would authorize the Energy Unit to provide financial assistance to projects that establish or expand manufacturing capacity in California for electrical critical electricity grid components, as specified. The bill would also authorize the Energy Unit to enter into production joint ventures with qualified private suppliers, as provided, and to provide bond financing and other assistance. The bill would authorize the Public Utilities Commission to authorize the recovery of costs incurred under the initiative only to the extent it determines those costs are just and reasonable, cost-effective, and aligned with state energy policy, as provided. To the extent the joint procurement results in costs below prevailing market prices for critical electricity grid components, the bill would require the commission to ensure that the difference is credited to ratepayers, as provided. Under existing law, a violation of an order, decision, rule, direction, demand, or requirement of the commission is a crime. Because a violation of a commission action implementing certain requirements of the bill would be a crime, this bill would impose a state-mandated local program. Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank (I-Bank) within GO-Biz and, 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, as provided. This bill would create the California Grid Manufacturing Initiative Revolving Fund in the State Treasury, and the Manufacturing Incentive Account and the Procurement Account within the revolving fund, Treasury for the purpose of providing financial assistance pursuant to the initiative. The bill would make the moneys in the revolving fund continuously appropriated for expenditure in accordance with the initiative. The bill would authorize the I-Bank, on behalf of the Energy Unit, to issue revenue bonds to finance procurement and manufacturing of critical electricity grid components, and would authorize the I-Bank to provide financial assistance, including financial assistance from the proceeds of the revenue bonds, to a participating party, as defined, in connection with the financing or refinancing of a project to establish or expand manufacturing capacity for critical electricity grid components. The bill would require the I-Bank to meet and confer with the Energy Unit for eligible projects and would provide that final authority to provide financial support to an eligible project resides with the Energy Unit. The bill would require the proceeds of the any bonds to be deposited into the respective accounts the revolving fund and used exclusively for the purposes of the initiative. By establishing a continuously appropriated fund, the bill would make an appropriation. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for specified reasons. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Digest Key Vote: MAJORITY Appropriation: YES Fiscal Committee: YES Local Program: YES Bill Text The people of the State of California do enact as follows: SECTION 1. The Legislature finds and declares all of the following: (a) California’s electric system depends on timely access to large power transformers, distribution transformers, and other critical electricity grid components to ensure reliability, affordable rates, wildfire resilience, emergency response, and the achievement of the state’s clean energy goals. (b) National and global supply chain constraints have resulted in extended lead times, elevated costs, and limited availability of critical electricity grid components. (c) Fragmented procurement and uncoordinated demand signaling by utilities and public agencies can increase market uncertainty and may inhibit investment in manufacturing capacity. (d) Coordinated demand aggregation, centralized procurement, advance market commitments, and targeted manufacturing incentives can reduce risk, lower costs, and expand supply for critical electricity grid components that are forecast in California energy planning processes. (e) In certain circumstances, market forces alone are insufficient to ensure adequate and timely supply, necessitating state-enabled intervention, including public-private partnerships. (f) Manufacturing Increased in-state manufacturing of critical electricity grid components holds the potential to supply a significant base of high-skill, high-paying jobs in California and equip the electrical grid for mass electrification. SEC. 2. Article 8 (commencing with Section 12100.80) is added to Chapter 1.6 of Part 2 of Division 3 of Title 2 of the Government Code, to read: Article 8. California Grid Manufacturing Initiative 12100.80. The following definitions apply for purposes of this article: (a) “Commission” means the Public Utilities Commission. (a) (b) “Critical electricity grid components” means electricity grid components for which supply constraints, extended lead times, elevated costs, or other limitations to procurement are causing delays to the construction, upgrade, or maintenance of transmission and distribution infrastructure. (c) “Electrical corporation” has the same meaning as defined in Section 218 of the Public Utilities Code. (b) (d) “Electricity grid components” means equipment equipment, materials, or devices used in the transmission, distribution, or storage of electricity, including, but not limited to, transformers, cables, wires, circuit breakers, reconductors, and switchgears. (c) (e) “Energy Unit” means the Energy Unit created within the Governor’s Office of Business and Economic Development pursuant to Section 12100.110. (d) (f) “High road employment” means employment that is consistent with the job quality standards and employment practices set forth in subdivision (s) of Section 14005 of the Unemployment Insurance Code. (e) (g) “Initiative” means the California Grid Manufacturing Initiative established pursuant to Section 12100.81. (f) (h) “Public utility” means an electrical corporation as defined in Section 218 of the Public Utilities Code or a local publicly owned electric utility as defined in Section 224.3 of the Public Utilities Code. 12100.81. The Energy Unit, in coordination with the Public Utilities Commission, the State Energy Resources Conservation and Development Commission, the Independent System Operator, public utilities, and the California Infrastructure and Economic Development Bank, shall establish the California Grid Manufacturing Initiative to implement the purposes of this article. 12100.82. The Energy Unit shall do both all of the following: (a) Identify and procure critical electricity grid components, which includes, but is not limited to: (1) Identifying critical electricity grid components in coordination with public utilities. (2) Determining the appropriate form or forms of state assistance to address identified delays, including, but not limited to, centralized procurement on behalf of public utilities. (3) Where centralized procurement is warranted, serve as the state’s central entity for aggregating demand and coordinating the procurement of critical electricity grid components on behalf of participating public utilities. (a) Determine and provide appropriate forms of state assistance to address identified delays with critical electricity grid components. (b) Incentivize new or existing in-state manufacturing of electricity grid components. (c) Provide support to joint procurements. 12100.83. (a) Consistent with the process and schedule adopted pursuant to subdivision (b), the Energy Unit shall identify electricity grid components for which central procurement would further the purposes of this article. (b) (1) The Energy Unit shall develop a process for each public utility, on or before January 1, 2028, and regularly thereafter, to submit a projection of its purchasing needs for critical electricity grid components for which the public utility has not entered into a purchase agreement and for which the public utility affirmatively seeks the assistance of the Energy Unit in coordinating resources and leveraging purchasing power. (2) The projection shall include all of the following: (A) Component types and specifications. (B) Quantities needed of each of the component types. (C) Delivery timelines. (c) Based on the projections, the Energy Unit shall determine the statewide aggregate purchasing needs for critical electricity grid components, which shall serve as the basis for procurement and manufacturing incentives pursuant to this article. (d) The Energy Unit shall also determine other forms of state assistance, separate from central procurement, to support the purchasing of critical electricity grid components, including but not limited to, upstream supply chain intervention, technical assistance, and regulatory coordination. 12100.84. (a) If the Energy Unit determines that centralized procurement is warranted for a critical electrical grid component identified pursuant to Section 12100.83, a participating public utility may, prior to the issuance of a solicitation under Section 12100.85, submit to the Energy Unit the conditions under which the public utility commits to purchase those components from the initiative, unless the initiative is unable to provide the requested electricity grid components. Conditions may include, but are not limited to, any of the following: (1) A maximum price or not-to-exceed cost threshold. (2) Technical specifications and performance requirements. (3) Delivery timelines. (4) Other reasonable commercial terms. (b) If a procurement conducted pursuant to Section 12100.85 satisfies the conditions submitted by a pub [Text truncated for display. Full text available on Congress.gov.]