Wind contracts may push Austin Energy to 35% renewable energy goalJun 15 - McClatchy-Tribune Regional News - Marty Toohey Austin American-Statesman
Austin Energy is on the verge of signing two large-scale wind contracts that would satisfy the city-owned utility's goal of getting 35 percent of its electricity from renewable sources -- four years ahead of a 2020 target date. The City Council is expected on Thursday to authorize final negotiations for a pair of 25-year contracts worth a combined $1.4 billion. Austin Energy would add 570 megawatts of wind generating capacity from the Texas Gulf Coast, a source that the utility's executives prefer to West Texas because coastal wind tends to blow hardest during the late afternoon, when many Austinites are coming home from work, temperatures often peak and energy demand is highest. The new wind farms would make Austin Energy among the nation's greenest utilities by most estimates. Austin Energy General Manager Larry Weis said the utility's costs would dip slightly by investing in the wind farms. "We're just trying to take advantage of these wind opportunities while the prices are so attractive," Weis said. The proposals going to the council were rated best among 100 or so that Austin Energy received from 33 companies after sending out a general call to pitch ideas. The contracts call for Austin Energy to spend between 2.3 cents and 3.3 cents per kilowatt-hour for the wind, as opposed to the going rate of 4 cents per kilowatt-hour for natural gas, as estimated by the U.S. Energy Information Administration. (Austin Energy's wind price would not vary, but the utility will not reveal that price, saying that revealing what the utility is willing to pay could give an advantage to competitors bidding on future wind projects.) Wind is not a silver bullet for reducing carbon emissions, which most climate scientists say contribute to global climate change. Even winds that tend to blow at peak times are not always reliable, and with no proven, cost-effective way to store electricity on a large scale, most utility executives say sources are still necessary that aren't subject to the vagaries of Mother Nature. Still, Bernie Bernfeld, chairman of the city's Electric Utility Commission, said the wind contracts appear to be a good deal in part because building a natural gas plant is expensive and that cost often isn't taken into account when calculating the cost of gas. "Wind and gas have a construction cost, but after you build a wind farm, the fuel is free," Bernfeld said. "It's hard to make a straight-line comparison (of the costs) because we don't know for sure what gas prices will be in the future. That's why we need a blended portfolio." Under the proposed contracts, Austin Energy would pay only when the facilities are generating electricity. One contract, with Duke Energy, calls for spending up to $40 million a year for 25 years for electricity from two 200-megawatt Starr County facilities, the first of which is expected to be online in 2014, with the other in 2016. The second contract, with E.ON Climate and Renewables, calls for spending up to $15.5 million per year for 25 years for energy from a 170-megawatt Nueces County wind farm that should be up and running in 2014, according to an Austin Energy summary to the council. If approved, they will be Austin Energy's fourth and fifth coastal wind contracts. In summer 2011, the utility signed a pair of contracts to pay about 4 cents per kilowatt-hour for electricity from two facilities that can generate up to 291 megawatts between them. Last fall the utility agreed to a wind deal with a 200-megawatt facility for about 4 cents per kilowatt-hour. Those coastal wind contracts were among the smoothest patches of an occasionally bumpy road to reach the 35 percent renewable energy target. Austin Energy established its groundbreaking GreenChoice program in the late 1990s after signing deals with West Texas wind farms trying to establish themselves in the then-nascent industry. Under that program, Austinites can tie their electric rates to the utility's wind contracts. At times, as prices rose for coal, natural gas and nuclear fuel, GreenChoice was the cheaper option. Through GreenChoice, Austin Energy most years leads the country in renewable energy sales, according to the National Renewable Energy Laboratory. But Austin Energy also invested in a 30-megawatt solar plant in Webberville that is costing 16.5 cents per kilowatt-hour and a costly 100-megawatt East Texas wood-burning facility that went live last year. The latter, which was widely criticized for both the cost and rush to approve the contract, costs about 9 cents per kilowatt-hour now and will gradually rise to around 16 cents per kilowatt-hour. Austin Energy now gets about 25 percent of its electricity from renewables. Even with a contract with a 195-megawatt West Texas wind farm expiring in 2015, the coastal wind deals would leave Austin Energy at 35 percent by 2016. The rest comes from coal, nuclear power and natural gas. Another West Texas wind contract will expire in 2017, and Weis said that is one reason Austin Energy will keep looking for more deals for renewable energy. That includes increasing the utility's solar portfolio from 41 megawatts now to at least 200 megawatts by 2020 -- and possibly more if the council directs Austin Energy to adopt a solar advisory committee's goal of 400 megawatts. "I don't think there's any problem, if it's affordable, to be going over 35 percent," Weis said.
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