Public agency Monterey Bay Community Power has signed a memorandum of understanding with the project developer, a joint venture between Trident Winds and EnBW North America.
Power purchase agreements for the entire 1GW are eventually expected to be signed, the companies stated.
Alongside permitting, securing buyers is one of the biggest challenges facing developers in the US offshore wind industry.
Castle Wind is expected online in 2026.
"While the [Castle Wind] project is still several years away, we know that offshore wind is poised to play an integral role in California’s electricity portfolio, which will help the state meet its aggressive climate goals at the least cost," said Castle Wind CEO Alla Weinstein.
California, the fifth largest economy in the world, has an ambitious goal of 100% zero-emission energy sources for its electricity by 2045.
The project, planned for a site 40km off the coast, will use floating foundations because the water is 800-1,000 metres deep.
Monterey Bay Community Power is a new, locally controlled public agency that will provide carbon-free electricity in Monterey, San Benito and Santa Cruz counties.
Meanwhile, a Castle Wind-commissioned study found that 7-9GW of offshore wind could save Californian ratepayers $1-2 billion on a net present value basis by 2040.
The cost saving would be made in comparison to current assumptions about California’s future energy portfolio, including that it would be reliant on solar PV, storage and out-of-state onshore wind, according to energy consultancy E3.
This capacity would meet about 10% of the state’s electricity needs by 2040, E3 found.
"While California leads most states in renewable energy deployment, it will need several times more renewable energy capacity than is currently installed to meet its long-term policy commitments," said Sanderson Hull, senior consultant at E3 and lead author of the study.
"Offshore wind is a promising resource that has not yet been fully investigated as a component of California’s optimal pathways for meeting its clean energy goals."