Austin makes major investment in new solar

The Austin City Council took a huge step toward achieving the city’s renewable energy goals on Thursday when it approved up to 300 megawatts’ worth of utility-scale solar contracts that will last for the next 15 to 25 years. The story isn’t over yet, though, as Council has additional contracts on the table that could bring the total purchase up to 600 MW.

The measure passed on a 9-2 vote, with Council members Ellen Troxclair and Don Zimmerman dissenting.

As laid out by Austin Energy staff, the city will enter into a 15-year contract with East Pecos Solar LLC for 118 MW of solar at a cost of about $13 million per year. It will also enter into additional agreements with undisclosed firms totaling up to 182 MW at a cost of about $20 million per year for as many as 25 years.

Austin Energy staff estimated in backup documentation that the contracts will cost about $695 million over their lifetimes. In addition, staff projects that the average residential ratepayer will pay 28 cents more per month in 2017 as a result of the purchase, while a customer running a small office would pay 31 cents more per month.

Staff also estimates that the purchase will increase the power supply adjustment – which the utility charges to cover fuel and power purchases – by up to 1 percent in the first four years of the agreement, with “neutral to slightly positive impacts in later years.”

The purchase was prompted, in part, by the 10-year Austin Energy generation plan that Council adopted in December 2014. It set a goal to achieve 55 percent renewable energy by 2025, called for Austin Energy to request up to 600 megawatts’ worth of solar bids this year and directed the utility to contract for up to that amount by 2017, “if available and affordable.”

The bids that Austin Energy staff received in response to the request it put out earlier this year included the lowest offers the utility has ever received – under $40 per megawatt hour.

Those low prices do not apply to all of the contracts, however. Khalil Shalabi, Austin Energy’s vice president of energy market operations and resource planning, said on Sept. 24 that as the city approaches the full 600 MW, staff has to dig deeper into the pile of offers and select more expensive bids.

Although Council had the opportunity to enter into the full 600 MW in solar contracts on Thursday by considering a separate item, members opted unanimously to postpone a vote on the additional agreements until Oct. 15.

This story has been corrected to reflect that the agreement will allow the purchase of “up to” 300 megawatts’ worth of utility-scale solar contracts, not 300 megawatts’ worth of utility-scale solar contracts.