Ongoing Discussion in Austin on Solar Goals: Should we move to 400 MWs?

This week offered more discussions on Austin Energy’s solar goals. Back in 2010, City Council approved a 2020 Generation Plan and Climate Action Plan for Austin Energy that set a 200 MW solar goal — roughly 2.5% of total energy needs. The Generation Plan also said Austin Energy should consider adding to this goal to include a distributed solar goal.

In 2012, City Council approved a resolution to form a Local Solar Advisory Committee. LSAC was a multi-stakeholder group that met for the better part of a year and came out with a recommendation in 2013 of moving to a 400 MW solar goal, with half of the solar being installed within the Austin Energy service area (roughly Travis County). The report concluded that meeting these goals would only cost roughly $35 million between 2014 and 2020, and would actually save money by 2020, assuming that the new solar power was replacing the need to build and operate a new gas plant. Those savings would continue through 2030 since solar power has no fuel costs, and very limited operations and maintenance, whether owned by the utility or a third-party. That report, which can be found here, was roundly criticized by Austin Energy staff. In an August, 2013, Austin Energy  found that meeting a 200 MW goal could instead cost six times as much as the LSAC assumed, or roughly $230 million. That presentation can be found here.

The Austin Energy report itself led to lots of criticism due to many assumptions about continued high solar prices, low future energy prices and not taking into account issues like the amount Austin Energy spends on natural gas hedging. Austin Energy then hired KEMA, a consulting firm, which produced its own report (link here) looking at the LSAC report. That report was generally positive about the LSAC report founding that the overall goal, local goal and distributed goals recommended in the report were technically feasible, but they did differ with LSAC in the expected costs for utility-scaled. While LSAC expected utility-scale solar to save the utility money — because the energy would replace the need to build and run new gas plants — the KEMA report assumed the solar utility plants would cost money as they guestimated that future wholesale market prices would be slightly below the cost to finance and run a solar plant. Thus, KEMA found that reaching 400 MW would cost approximately $85 million between 2014 and 2020. Just for comparison sake, that is roughly what we spend each year to purchase coal from Wyoming to run our portion of the Fayette Coal Plant. And we would get this solar resource for 20 to 30 years!

KEMA presented their report twice this week, once to a joint committee meeting of the Electric Utility Commission and Resource Management Commission and to a subcommittee of the Austin City Council. Copies of the presentations can be found here.

Here is a table comparing the findings of the three studies on the 400 MW goal.

Table. A Comparison of Costs in Million Dollars Between KEMA, LSAC and Austin Energy to Achieve 400 MW Goals

Category LSAC KEMA Austin Energy (Case A)
Total Cost in 2014 $7.61 $7.80 $21.89
Total Cost in 2020 ($9.93) $18.13 $38.02
Total Cumulative Costs, 2014 – 2020 $36.16 $84.96 $226
Rate Impact, 2014 0.30% 0.32% Not listed
Rate Impact, 2020 -0.64% 1.12% 1.7%

Sierra Club also presented at both forums, arguing that City Council should adopt the LSAC recommendations and the various factors would make costs lower than those estimated by KEMA. These include recent changes to the market which will likely increase the market costs of energy, the likelihood that additional regulations on gas plants will make owning and operating gas plants more expensive and the fact that new financing tools should lower the cost of solar. The City Council present at the Committee meeting was amenable to revisiting the solar goals, but did listen to an argument from Austin Energy that these issues should be revisited as part of an update to the 2012 Generation Plan, expected in 2014. Sierra Club will continue to support a more robust solar plan and programs as one of the key ways to move Austin beyond coal and grow local businesses.

Some good news did also arrive that Austin Energy has put out an RFP for 50 MWs of solar, with the expectation that it would be built and operating within a few years. Stay tuned for more on solar — the emissions free, drought-free and fuel-free resource.

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