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.
Summary
AB 1095 expands California’s climate finance and renewable energy credit rules in two related ways. First, it adds data center waste heat capture and conversion as a new eligible category under the Climate Catalyst Revolving Loan Fund Program, allowing the California Infrastructure and Economic Development Bank (I-Bank) to provide financial assistance for projects that turn data center waste heat into usable energy. The bill also directs the State Energy Resources Conservation and Development Commission (Energy Commission) to serve as the consulting agency for this category and to help prioritize projects if more than one seeks funding.
Second, the bill amends the Renewables Portfolio Standard Program to treat certain data center waste heat energy as eligible for renewable energy credits. A data center that captures and converts waste heat to electricity may receive credits if the energy is used at the same facility or location where it is generated. The bill also creates a separate pathway for data centers that use waste heat to heat buildings, requiring the Energy Commission to develop a metric that awards credits based on avoided energy use. Credits issued under the bill may be used to meet the data center’s own renewable procurement obligations or be sold or transferred under existing program rules.
Impact
The bill would amend Government Code Section 63048.93 to add a new climate catalyst project category for data center waste heat and would expand the uses of the continuously appropriated Climate Catalyst Revolving Loan Fund, which is why the measure is treated as making an appropriation. It would also amend Public Utilities Code Section 399.12 and add Section 399.34 to define data centers and waste heat energy, and to make certain waste heat-derived electricity eligible for renewable energy credits under California’s Renewables Portfolio Standard framework. In practice, the bill would affect I-Bank financing decisions, Energy Commission rulemaking, and the compliance options available to data centers and potentially utilities or other market participants that buy or use the credits.
Sentiment
The available voting history suggests broad support and little opposition. The bill passed the Assembly committees it was referred to on unanimous votes, including 18-0 and 14-0, and was recommended to the consent calendar. There are no committee transcript excerpts indicating significant controversy or divided testimony. Overall, the measure appears to have been viewed favorably as a climate/energy efficiency initiative and as a way to encourage beneficial reuse of data center waste heat.
Contention
The main policy questions implied by the bill are how to define and verify eligible waste heat projects, how to prevent double counting of renewable energy credits, and how the Energy Commission should set the crediting metric for building-heating applications. Another potential point of contention is whether data center waste heat should be treated as sufficiently renewable-like to earn credits under the RPS, since the bill extends crediting to a new class of end users rather than traditional generation resources. The bill also gives the Energy Commission discretion to prioritize projects based on state policy and financial considerations, which could matter if multiple projects compete for limited loan fund resources.
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