Austin Energy proposes gas peaker units, not larger combined cycle plant

Austin Energy has been working for more than a year – collaborating with stakeholders and looking at a variety of technologies, “including energy efficiency, demand response, batteries, rooftop solar expansion and natural gas peaker units or combined-cycle generation and more” – in order to deliver the Austin Energy 2035 plan, according to Austin Energy Chief Operating Officer Lisa Martin.

Martin was the featured speaker at the Austin Energy City Council committee meeting on Tuesday, which started at 9 a.m. and continued for more than four hours.

One of the most important facts about the new 2035 plan is that the utility has given up the idea of constructing a new natural gas combined cycle facility, a solution that was initially on the table. Martin explained that even though they no longer want to build the combined cycle facility, the utility still believes that it is necessary to build new natural gas peaker units. Environmentalists are generally opposed to any new gas units.

As Martin pointed out to the both Council in person and to the Austin Monitor via email, “What we found through our modeling is that every combination of technologies leads to different tradeoffs, and the model that included new combined cycle generation resulted in low cost and reliability metrics but more emissions than what is compatible with the values and objectives we hear from stakeholders.

“In our next round of modeling, we limited ourselves to natural gas peaker units that can fill the gaps and be turned on only when we need it,” she explained. “These peaker units are quick-start capable and allow Austin Energy to protect our community from high energy prices and potential energy shortages during days when demand and transmission congestion are high. They’re also more efficient than our older, existing units, so on a majority of days when we only need some peaker units, we end up with a cleaner solution. This led to a more balanced set of tradeoffs.”

Those peaker units, which Martin compared to jet engines, would be particularly useful during a situation like the winter storm in February 2021, although customers might still be without power for some time. However, the peakers might save the utility – and its customers – from a financial catastrophe. During questions from Council, Martin stressed that it was important to move ahead with the decisions about new sources of generation.

Responding to a question from a Council member, Martin said, “Our modeling has peaker units coming online in 2027, the earliest we think they could reasonably be commercially available, but a more specific timeline will require separate City Council action after the plan is approved.”

Council Member Ryan Alter gave his views on the plan for about 30 minutes. He said he would not vote for a plan that included more natural gas as recommended by the utility. He said battery storage would be the most reliable and the most affordable, and would avoid additional pollution in East Austin, where the peakers would inevitably go. He also said adding the peakers would not have prevented the outages caused either by the 2021 freeze or Winter Storm Mara in 2023.

His rejection of the peakers drew applause from some members of the audience, many of whom were there to address Council. After that, Mayor Pro Tem Leslie Pool, who chairs the committee, tried to steer the meeting back to other members of Council. Ryan Alter argued with Pool, saying he was not done speaking. However, at the end of the argument he said he had lost his train of thought.

Austin Energy has committed to releasing the finished 2035 plan on Nov. 27, the day before Thanksgiving. Council Member Alison Alter urged the utility to release the plan earlier if possible, but Martin said that was unlikely. The Electric Utility Commission has a special called meeting to consider the plan on Dec. 2, and Council has the matter on its Dec. 12 agenda, which is the final meeting of the year. (Here is the presentation Martin made to the EUC, which is similar but not identical to the one she made to Council.)

Several speakers urged Council to adopt the plan with more solar battery storage and reject adding new gas turbines. During her presentation, Martin presented charts showing cost comparisons and trade-offs between batteries and peakers. Both batteries and peakers are highly dispatchable.

Martin said the utility currently has four peakers at Decker and six at Sandhill, all of which are older and less efficient than what the utility can buy now. Those peakers can be used in a “black start” situation, which refers to a time when the whole system goes down. Batteries do not operate in the black start scenario.

Mayor Kirk Watson asked Martin, “How do we make sure we stay in the land of what the peaker units are actually for – that we’re not actually going to use those peaker units for something other than just when you need them – so you could use them to generate electricity and sell it?”

Martin responded, “It’s literally about running them when demand is the highest. They come on as the unit of last resort.” The utility would be “running them when you need it. … Basically all the cost of running a generator is passed on to the customer and the revenue is passed on to the customer.” Generally, a peaker runs 12 percent of the time, but limitations can be put on the number of hours it runs, she said.

In response to a question from Council Member Chito Vela, Martin confirmed that the newer, more efficient peakers would be used more than the older ones. “They’re intended to be highly flexible, so you start them up and shut them down,” like jet engines, she said.

Vela seemed convinced that Austin Energy should go ahead with its plan, just as Ryan Alter seemed convinced not to support it.

At the end of the meeting, Pool concluded, “Austin Energy has some of the most ambitious sustainability goals of any utility in the country. … As we oversee them, we want to continue to build resilience and sustainability into our energy future. Let there be no mistake about that at all from anyone. It is key to the energy future for our residents and our businesses in Austin.”

She also quoted the advice they recently heard from Professor Michael Webber of the University of Texas: “We will get the best outcomes, our city will get the best outcomes, if the Council through our decision-making allows for flexibility, creativity and innovation.”

So, as Austin Energy makes its final recommendations for the plan, she said she would like to see “flexibility that keeps cost effectiveness and system reliability top of mind as we face continued expected growth of EVs, data centers and population. An innovative approach that allows for emergent technologies (such as) advanced nuclear, geothermal and solar battery pairings and maintaining Austin Energy’s black start utility status,” among others. She concluded that she wanted Austin Energy to maintain its status as the most environmentally friendly utility in the state.

Photo by Kurt Kaiser, CC0, via Wikimedia Commons.

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