Austin Energy pushes back against renewable energy goals

Friday, Aug. 1, 2014

By Lilly Rockwell
Austin American-Statesman

Austin Energy is fearful of one thing: becoming the next Germany.

The European country set an ambitious goal in 2010 of producing 80 percent of its electricity from renewable sources, such as wind and solar, by 2050. German rooftops were blanketed with solar panels. Germany built solar and wind farms. And it decided to shut down its nuclear plants by 2025, motivated in part by concerns about nuclear safety.

Austin Energy use source chart

But Germany’s quick embrace of renewable energy has been disastrous for the country, causing utility rates to skyrocket and still leaving a reliance on carbon-producing gas and coal plants during high-demand times. The Daily Telegraph reported that Germany released more carbon dioxide into the atmosphere in 2012 than in 2011.

"They have a new term — energy poverty," said Khalil Shalabi, the vice president of energy market operations and resource planning for Austin Energy. "Forget rent, they can’t pay their electric bill."

Austin Energy officials worry about becoming the next cautionary tale of energy policy as the Austin City Council is poised to consider a new plan for ramping up how much of the utility’s power generation comes from green energy. A report by a city-appointed task force issued this week called for a Germany-style goal of going carbon-free by 2030.

The report by the Generation Resource Planning task force also calls for a heavier reliance on solar energy, to shut down the natural gas-powered Decker Power Plant by 2016, and to change the ownership of the city’s share in the Fayette coal-fired power plant to make it easier to sell or shut down.

Though the recommendations haven’t been formally presented to the council yet, Austin Energy has already begun a campaign against the report. The utility pushed back against many of its conclusions, saying too much renewable energy too quickly can be prohibitively costly for ratepayers.

The City Council had previously set a goal of generating 35 percent of the utility’s energy from renewable sources by 2020. But Austin Energy is on track to reach that goal early in 2016. So the City Council set a new goal of becoming carbon-free by 2050, and it created a task force to study what the utility’s renewable goals should be.

But the utility hopes to persuade the council to back off the hard deadlines, and it is presenting its own plan in September for future power generation.

"It’s important what Austin Energy thinks," said Michael Osborne, the chair of the Generation Resource Planning Task Force and a former Austin Energy executive. "But it’s the City Council that sets the policy."

And the City Council is facing pressure from renewable energy advocates and environmentalists to reduce the utility’s dependence on its coal, gas and even nuclear-powered plants, which make up 79 percent of the utility’s power generation.

"When we have acted in the past as first-movers, with the biomass plant and Webberville solar plant, we are locked into long-term contracts at above-market cost, and it’s not entirely clear what the value of those investments was," said Mark Dreyfus, the director of regulatory and government affairs at Austin Energy.

The Webberville solar farm, just east of Austin, was approved in 2009, and it costs the utility 16.5 cents-per-kilowatt-hour, versus a new solar energy contract the utility just inked for around 5 cents-per-kilowatt hour.

Proponents of renewable energy, however, are deeply skeptical of Austin Energy’s conclusions.

Task force members interviewed by the Statesman said they don’t buy Austin Energy’s argument that investing heavily in renewable energy would be more expensive than so-called "brown" energy sources like coal or natural gas.

Osborne said information provided by Austin Energy about the cost of its gas generation shows it is nearly twice as much per megawatt-hour as solar energy.

"Any fool can see looking at these numbers provided by Austin Energy that (renewable) is cheaper than gas or coal for energy in the future," said Tom "Smitty" Smith, the state director of watchdog group Public Citizen.

Smith said the utility isn’t making price comparisons based on the future cost of renewables and brown power.

"The thing that Austin Energy is ignoring, and that City Council has directed them to do, is to take every step they can to reduce their carbon emissions because of the greater risk to our community of global warming," Smith said. "It’s time for Austin Energy to grow up and act responsible for their emissions."

Coming Monday: Earlier this year, Austin Energy overhauled its GreenChoice program that allows customers to pay a different price to support wind energy. But the changes have drawn criticism from renewable energy supporters.

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