Austin Energy hopes new solar standard offer can scale up sorely needed local generation

Update 10:35 p.m. Oct. 2: On Monday, the Electric Utility Commission (EUC) approved an update to the city’s solar program after a quick discussion.

As Austin Energy grapples with an electric future and unprecedented demands on the grid, the utility is making moves to secure a place for locally generated renewables with a new approach to community solar.

The move comes as the utility has struggled to scale up the program’s present model, in which residential customers opt in to energy purchases from local solar farms in exchange for locked-in rates offering long-term savings on utility bills. While the program has seen moderate success – launching complexes at the Palmer Events Center, Austin-Bergstrom International Airport and the La Loma solar farm – the utility says further projects have repeatedly floundered in the proposal stage thanks to logistical challenges.

The proposal, called a “standard solar offer,” would break with a decade-old framework that has yet to provide incentives to landowners of leased residential and commercial properties, a gap that has left large swaths of untapped solar potential on rooftops and parking lots throughout the city. Landowners would agree to host solar complexes ranging from 3 kilowatts to 10 megawatts in exchange for direct compensation at a rate approximating the utility’s cost savings, which is to be updated every three years.

For now, Austin Energy is proposing a reimbursement rate of $0.0761 per kilowatt hour for systems less than 1 MW, and $0.0494 per kilowatt hour for those larger. That could translate to anywhere from $6,278.25 to $815,100 in yearly returns for its first round of participants, who will be limited to commercial projects between 50 kW and 10 MW in size. Such figures are based on the utility’s own estimate that 1 kW of AC power will generate around 1,650 kW per year on average.

The utility says it also hopes to include residential participants, through opening the program to systems as small as 3 kW, by 2026.

Austin Energy says the proposed rates are calculated from the savings in ERCOT market prices, transmission congestion and ancillary service costs provided by solar generation in the year 2021, with plans to reconfigure rates in 2026 based on data averaged out from years 2021-2025. But a number of those with the city’s Electric Utility and Resource Management commissions joined Council’s Utility Oversight Committee last Tuesday to call this approach into question.

“This is an exciting new addition, but the rate that is being proposed is wholly inappropriate and too low to make the program successful. … We already have seen the Resource Management Commission recommend utilizing the full value of solar rate used for behind-the-meter installations,” said Electric Utility Commissioner Kaiba White. “At the very least, it should be based on current data, or perhaps an average of the past three years.”

Austin Energy maintains that its proposal has been warmly received by stakeholders but it has agreed to return with a number of alternatives for discussion. In the meantime, the Resource Management Commission has asked that Council postpone a public hearing on the matter until after Oct. 15.

Readers can learn more about Austin Energy’s existing community solar program at its website. Though currently at capacity, customers interested in joining can sign up to be placed on a waitlist.

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