AB 1095: Data centers: waste heat energy.
This bill aims to expand the California Renewables Portfolio Standard Program to include waste heat energy. Currently, the program requires utilities to procure a certain percentage of their electricity from renewable sources. The bill would make data centers generating waste heat eligible to receive renewable energy credits if the waste heat is used at the same facility, captured, and converted. Additionally, data centers using waste heat to provide heating for buildings would be eligible to receive credits based on the amount of energy usage avoided. The state energy resources conservation and development commission would develop a metric to determine the amount of credit awarded.
| Feb. 02, 2026 | From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. |
| Jan. 31, 2026 | Died pursuant to Art. IV, Sec. 10(c) of the Constitution. |
| May. 23, 2025 | In committee: Held under submission. |
| May. 14, 2025 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr. 29, 2025 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 14. Noes 0.) (April 28). Re-referred to Com. on APPR. |
| Amended IN Assembly April 21, 2025 |
| Amended IN Assembly March 25, 2025 |
| Introduced by Assembly Member Papan |
February 20, 2025 |
LEGISLATIVE COUNSEL'S DIGEST
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.
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.For purposes of this article, the following terms have the following meanings:
(a)“Conduit hydroelectric facility” means a facility for the generation of electricity that uses only the hydroelectric potential of an existing pipe, ditch, flume, siphon, tunnel, canal, or other manmade conduit that is operated to distribute water for a beneficial use.
(b)“Balancing authority” means the responsible entity that integrates resource plans ahead of time, maintains load-interchange generation balance within a balancing authority area, and supports interconnection frequency in real time.
(c)“Balancing authority area” means the collection of generation, transmission, and loads within the metered boundaries of the area within which the balancing authority maintains the electrical load-resource balance.
(d)“California balancing authority” means a balancing authority with control over a balancing authority area primarily located in this state and operating for retail sellers and local publicly owned electric utilities subject to the requirements of this article and includes the Independent System Operator (ISO) and a local publicly owned electric utility operating a transmission grid that is not under the operational control of the ISO. A California balancing authority is responsible for the operation of the transmission grid within its metered boundaries, which is not limited by the political boundaries of the State of California.
(e)“Eligible renewable energy resource” means an electrical generating facility that meets the definition of a “renewable electrical generation facility” in Section 25741 of the Public Resources Code, subject to the following:
(1)(A)An existing small hydroelectric generation facility of 30 megawatts or less shall be eligible only if a retail seller or local publicly owned electric utility procured the electricity from the facility as of December 31, 2005. A new hydroelectric facility that commences generation of electricity after December 31, 2005, is not an eligible renewable energy resource if it will cause an adverse impact on instream beneficial uses or cause a change in the volume or timing of streamflow.
(B)Notwithstanding subparagraph (A), a conduit hydroelectric facility of 30 megawatts or less that commenced operation before January 1, 2006, is an eligible renewable energy resource. A conduit hydroelectric facility of 30 megawatts or less that commences operation after December 31, 2005, is an eligible renewable energy resource if it does not cause an adverse impact on instream beneficial uses or cause a change in the volume or timing of streamflow.
(C)A facility approved by the governing board of a local publicly owned electric utility before June 1, 2010, for procurement to satisfy renewable energy procurement obligations adopted pursuant to former Section 387, shall be certified as an eligible renewable energy resource by the Energy Commission pursuant to this article, if the facility is a “renewable electrical generation facility” as defined in Section 25741 of the Public Resources Code.
(D)(i)A small hydroelectric generation unit with a nameplate capacity not exceeding 40 megawatts that is operated as part of a water supply or conveyance system is an eligible renewable energy resource only for the retail seller or local publicly owned electric utility that procured the electricity from the unit as of December 31, 2005. A unit shall not be eligible pursuant to this subparagraph if an application for certification is submitted to the Energy Commission after January 1, 2013. Only one retail seller or local publicly owned electric utility shall be deemed to have procured electricity from a given unit as of December 31, 2005.
(ii)Notwithstanding clause (i), a local publicly owned electric utility that meets the criteria of subdivision (j) of Section 399.30 may sell to another local publicly owned electric utility electricity from small hydroelectric generation units that qualify as eligible renewable energy resources under clause (i), and that electricity may be used by the local publicly owned electric utility that purchased the electricity to meet its renewables portfolio standard procurement requirements. The total of all those sales from the utility shall be no greater than 100,000 megawatthours of electricity.
(iii)The amendments made to this subdivision by the act adding this subparagraph are intended to clarify existing law and apply from December 10, 2011.
(2)(A)A facility engaged in the combustion of municipal solid waste shall not be considered an eligible renewable energy resource.
(B)Subparagraph (A) does not apply to generation before January 1, 2017, from a facility located in the County of Stanislaus that was operational before September 26, 1996.
(f)“Procure” means to acquire through ownership or contract.
(g)“Procurement entity” means a person or corporation authorized by the commission to enter into contracts to procure eligible renewable energy resources on behalf of customers of a retail seller pursuant to subdivision (f) of Section 399.13.
(h)(1)“Renewable energy credit” means a certificate of proof associated with the generation of electricity from an eligible renewable energy resource, issued through the accounting system established by the Energy Commission pursuant to Section 399.25, that one unit of electricity was generated and delivered by an eligible renewable energy resource.
(2)“Renewable energy credit” includes all renewable and environmental attributes associated with the production of electricity from the eligible renewable energy resource, except for an emissions reduction credit issued pursuant to Section 40709 of the Health and Safety Code and credits or payments associated with the reduction of solid waste and treatment benefits created by the utilization of biomass or biogas fuels.
(3)(A)Electricity generated by an eligible renewable energy resource attributable to the use of nonrenewable fuels, beyond a de minimis quantity used to generate electricity in the same process through which the facility converts renewable fuel to electricity, shall not result in the creation of a renewable energy credit. The Energy Commission shall set the de minimis quantity of nonrenewable fuels for each renewable energy technology at a level of no more than 2 percent of the total quantity of fuel used by the technology to generate electricity. The Energy Commission may adjust the de minimis quantity for an individual facility, up to a maximum of 5 percent, if it finds that all of the following conditions are met:
(i)The facility demonstrates that the higher quantity of nonrenewable fuel will lead to an increase in generation from the eligible renewable energy facility that is significantly greater than generation from the nonrenewable fuel alone.
(ii)The facility demonstrates that the higher quantity of nonrenewable fuels will reduce the variability of its electrical output in a manner that results in net environmental benefits to the state.
(iii)The higher quantity of nonrenewable fuel is limited to either natural gas or hydrogen derived by reformation of a fossil fuel.
(B)Electricity generated by a small hydroelectric generation facility shall not result in the creation of a renewable energy credit unless the facility meets the requirements of subparagraph (A) or (D) of paragraph (1) of subdivision (e).
(C)Electricity generated by a conduit hydroelectric generation facility shall not result in the creation of a renewable energy credit unless the facility meets the requirements of subparagraph (B) of paragraph (1) of subdivision (e).
(D)Electricity generated by a facility engaged in the combustion of municipal solid waste shall not result in the creation of a renewable energy credit. This subparagraph does not apply to renewable energy credits that were generated before January 1, 2017, by a facility engaged in the combustion of municipal solid waste located in the County of Stanislaus that was operational before September 26, 1996, and sold pursuant to contacts entered into before January 1, 2017.
(i)“Renewables portfolio standard” means the specified percentage of electricity generated by eligible renewable energy resources that a retail seller or a local publicly owned electric utility is required to procure pursuant to this article.
(j)“Retail seller” means an entity engaged in the retail sale of electricity to end-use customers located within the state, including any of the following:
(1)An electrical corporation.
(2)A community choice aggregator. A community choice aggregator shall participate in the renewables portfolio standard program subject to the same terms and conditions applicable to an electrical corporation.
(3)An electric service provider. The electric service provider shall be subject to the same terms and conditions applicable to an electrical corporation pursuant to this article. This paragraph does not impair a contract entered into between an electric service provider and a retail customer before the suspension of direct access by the commission pursuant to Section 80110 of the Water Code.
(4)“Retail seller” does not include any of the following:
(A)A corporation or person employing cogeneration technology or producing electricity consistent with subdivision (b) of Section 218.
(B)The Department of Water Resources acting in its capacity pursuant to Division 27 (commencing with Section 80000) of the Water Code.
(C)A local publicly owned electric utility.
(k)“Waste heat” means the heat that is produced as a byproduct of a machine process or other process that uses energy.
(l)“Waste heat energy” means the electricity that is generated from the capture and conversion of waste heat.
(m)“WECC” means the Western Electricity Coordinating Council of the North American Electric Reliability Corporation, or a successor to the corporation.
(a)For purposes of this section, both of the following definitions apply:
(1)“Data center” means a facility that houses computing infrastructure, including graphics and central processing units, servers, storage devices, networking equipment, and associated power and cooling systems, for the primary purpose of processing, storing, or distributing electronic data.
(2)“Eligible end user” means a data center.
(b)An eligible end user that generates waste heat energy by means of thermoelectric conversion, thermionic conversion, or thermovoltaic conversion shall receive renewable energy credits based on the amount of electricity generated pursuant to this article for that waste heat energy if both of the following conditions are met:
(1)The eligible end user demonstrates the capture and conversion of waste heat to electricity.
(2)The waste heat energy is used at the same facility or location where the waste heat was generated, captured, and converted.
(c)Notwithstanding subdivision (b), an eligible end user that uses waste heat to provide heating for buildings is eligible to receive renewable energy credits pursuant to a metric the Energy Commission shall develop that issues renewable energy credits based on the amount of energy usage avoided due to the use of the waste heat for building heating.
(d)Renewable energy credits shall be issued by the commission or the Energy Commission.
(e)An eligible end user may use renewable energy credits received pursuant to this section to satisfy their own renewable energy procurement requirements or may sell or transfer the renewable energy credits to utilities or other entities in accordance with rules or regulations adopted pursuant to this article.
(f)The renewable energy credits issued to an eligible end user pursuant to this section shall be tracked and verified using the same systems and procedures that apply to other eligible renewable energy resources under this article to ensure proper accounting and prevent double counting.
(g)Eligible end users that generate waste heat energy shall report the amount of electricity produced, the method of generation, and relevant greenhouse gas emission reductions to the commission and the Energy Commission as required under rules or regulations adopted pursuant to this article.