Austin Energy to secure 300 MW of solar, with another 300 MW possible

The Austin City Council on Oct. 1 moved dramatically toward its sustainability goals, directing its electric utility, Austin Energy, to sign contracts for up to 300 MW of West Texas solar power.

“With this purchase, the citizens of the Austin region will reduce their total carbon impact in a prudent and affordable way,” said Mayor Steve Adler in an Oct. 1 statement. “I’m excited we can take such bold action at a cost that fits within Austin Energy’s risk and price affordability standards.”

The purchase of 300 MW will position Austin Energy to be the largest user of solar power in Texas. The total package for the combined 300 MW is estimated at $695 million.

“Investing in renewables is a social justice issue in addition to being critical for environmental protection,” said Austin City Council Member Delia Garza. “We should take every opportunity to move toward renewables and lessen our dependence on fossil fuels when we’re able to do it in a way that’s affordable for our ratepayers. We took a significant step in the right direction today, and I look forward to continuing to work with our community to achieve the goals in our Generation Plan.”

“This solar acquisition will further diversify our energy portfolio and bring us closer to meeting the City’s sustainability goals,” said Marc Ott, Austin City Manager. “The long-term positive effects of today’s action will be felt for decades to come as Austin Energy continues to set the bar for renewable resource delivery.”

“Combined with our current acquisitions, these contracts more than double all of the solar energy currently in the ERCOT market,” said Larry Weis, Austin Energy General Manager. “Texas – which has abundant natural resources from the wind and sun – now becomes a major player in the solar industry. With this purchase, our utility will be nearly four times more renewable than all of the power used in Texas as a whole.”

On a 9-2 vote, the City Council approved a 15-year purchase power agreement for 118 MW of solar energy estimated at $13 million a year from East Pecos Solar LLC. It also gave the go-ahead to enter into contracts for up to another 182 MW.

With all things being equal, the power purchase agreements are expected to increase the average residential bill by less than half of 1% during the first four years with neutral to slightly positive impacts in later years. Power created by the West Texas projects will be sold into the ERCOT grid at market prices.

The projects, when they come online by 2017, will enable Austin Energy to deliver to the market from renewable sources 40% of the energy its customers consume. That figure surpasses Austin Energy’s former renewable energy goal of 35% by 2020 and is within reach of the city’s new goal of 55% renewables by 2025.

When added to the 150 MW of utility-scale solar approved by council last year and currently under development in West Texas, Austin Energy’s utility-scale portfolio will total 450 MW. Austin Energy also currently has about 60 MW of local solar, which includes a purchase power agreement for 30 MW from a solar farm in Webberville.

At present, the entire installed solar portfolio for the Electric Reliability Council of Texas (ERCOT) – which manages 85% of the statewide electric grid – totals less than 200 MW, Austin Energy noted.

In a separate but related item, the council postponed until Oct. 15 a decision on purchasing an additional 300 MW of solar power.

Council memos are also mum about other bid winners

A roundup issued by the City Council of what happened at the Oct. 1 meeting said:

  • Item #4. “Authorize execution of a 15-year power purchase agreement with East Pecos Solar, LLC, for approximately 118 megawatts of utility-scale, solar-generated electricity, in an estimated amount of $13 million per year; and power purchase agreements with other qualified offerors for approximately 182 megawatts of utility-scale, solar-generated electricity, for terms of up to 25 years in an estimated amount of $20 million per year; for an estimated combined total of $695 million. Related to Item #5. APPROVED”
  • Item #5. “Adopt a plan of achieving 600 megawatts of utility-scale, solar generation capacity by 2017 in addition to solar capacity currently existing or under contract; authorize negotiation and execution of power purchase agreements with qualified offerors for up to 350 megawatts of utility-scale, solar-generated electricity (for a total acquisition of approximately 600 megawatts of new solar capacity, if available and affordable) for terms of up to 25 years, for a combined estimated annual amount of $44,000,000 and combined total of $1,100,000,000; and waive the procedural requirements of Council Resolution No. 20110310-003 regarding power purchases of more than 10 megawatts. Related to Item #4.” That was the item pushed back to the Oct. 15 meeting.

On April 2, the City Council approved a resolution directing the City Manager to issue a Request for Proposals for up to 600 MW of solar generation. The offers provided Austin Energy with competitively priced, renewable solar energy and environmental attributes and the opportunity to continue progress toward its goal of having 55% of its energy resources come from renewable sources by 2025. Over 150 proposals from 33 respondents were received.

Said a pre-meeting memo describing Item #4, which was the 300-MW portfolio approved at the Oct. 1 meeting: “These utility-scale solar contracts will provide for the purchase of the full output of solar power projects to be constructed in the West Texas Region of the Electric Reliability Council of Texas (ERCOT). The solar projects are expected to come online by the end of 2017. Agreements will run for terms of 15 to 25 years and will not require Austin Energy to invest any funds in the construction, operation, or maintenance of the projects during that period. The agreements will each provide for a non-escalating fixed price per megawatt-hour (MWh) of energy produced, the quantity of which will vary in accordance with the actual availability of solar resources. The agreements are projected to increase the Power Supply Adjustment by up to 1% during the first four years of the agreement with neutral to slightly positive impacts in later years. The rate impact of this action is expected to be within affordability limits.”

The memo for Item #5, which was the porfolio delayed to the Oct. 15 meeting, says basically the same thing about that other set of projects.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.