Yesterday, the Austin City Council approved a resolution to direct Austin Energy to negotiate a deal to procure up to 150 MWs of solar power from West Texas through a Power Purchase Agreement with SunEdison. Austin Energy will return next week to City Council with a more detailed contract for final approval. Under the limited information that has been released publicly and discussed at City Council yesterday, Austin Energy GM Larry Weis explained that the deal was a take and pay contract where Austin Energy is only obligated to pay for any electricity generated by the plant at a fixed rate of roughly $50 per MWh or 5 cents per KWh. That is well below the retail rate paid for by Austin Energy consumers and is often below the wholesale market rate of energy in Texas, especially during hot summer days when solar produces the most electricity.
While recent press articles suggest that some California utilities are pursuing even cheaper PPAs, the announced price of $45 to $55 per MWh would represent the lowest price in the US that we could find thus far and is a game-changer in the energy industry. As an example, Austin Energy’s deal with the Webberville solar PV plant costs roughly $165 per MWh, and was only built four years ago. While AE was originally only looking for 50 MW of solar capacity in this latest request, they took a larger position because the price is so much cheaper than expected. Weis said on Thursday that while more solar was available at similar prices, his recommendation for the moment was not to go beyond the 150 MWs of additional solar to be built by 2016 until Austin Energy does a fuller review of all its energy needs, future costs and scenarios. Previously City Council has asked Austin Energy to consider doubling their solar goal from 200 to 400 MWs by 2020, as recommended by the Local Solar Advisory Council, a position supported by the Sierra Club. Austin Energy has said wait until we update our generation plan.
The Webberville Project: Near Austin, Texas
Separately, the Austin City Council is expected to name an Austin Energy Generation Task Force to begin looking at Austin Energy’s medium-range plans for future generation through 2024, including solar energy, its use of the existing coal and gas plants and the role of energy storage and demand response. In fact, Mayor Lee Leffingwell went ahead and announced his pick to the Generation Task Force: Spansion Facilities Engineer Barry Dreyling, who should be well versed on energy issues for large industrial consumers. Stay tuned for more info next week
Cyrus Reed, Conservation Director, Lone Star Chapter