Updated: Austin Energy still considering options to answer to grid growing pains

As its end-of-year deadline approaches, Austin Energy is busy crunching numbers, hoping to finally nail down a much-anticipated update to its Resource, Generation and Climate Protection Plan.

Update: Following publication of this story, Austin Energy reached out to the Monitor to let us know that the utility is no longer proposing hydrogen as part of the plan.

“We have heard those concerns – among others – and have adjusted accordingly,” wrote a spokesperson for Austin Energy. “As the city’s public power utility, it is Austin Energy’s essential responsibility to consider all sorts of possible energy futures and technologies. As we refined our modeling and analysis, hydrogen fell out of the mix, though we will continue to monitor hydrogen and other technologies for innovation opportunities. “

Utility staffers have spent the past month in and out of Electric Utility Commission meetings sharing modeling data on dozens of scenarios for the updated plan, which will map out the next decade of infrastructural build-outs to meet the growing demands of Austin’s electric grid. Additional gas generation, expanded transmission infrastructure, and an ambitious scaling of local solar generation and battery storage capacity are all on the table as staff weigh the costs and benefits of each hypothetical route.

The update is behind schedule thanks to controversy surrounding Austin Energy’s initial proposal, which relied heavily on a new power plant that would run on natural gas before transitioning to a more climate-friendly, hydrogen-based fuel source sometime in the next four to five years. Environmental watchdogs like Sierra Club, Public Citizen and Third Act Texas have all been critical of the approach, calling for a more dogmatic commitment to reversing course on greenhouse gas emissions.

The utility argues the plant could be a critical source of local, dispatchable power as it manages a long-term transition to cleaner energy sources, particularly as unprecedented stresses are put on the power grid because of worsening transmission congestion, more extreme weather events, expanding artificial intelligence and data center industries, plus electrification of the vehicle sector. 

At the Electric Utility Commission’s urging, Austin Energy is continuing to consider more aggressive pivots away from natural gas, including among its modeling a number of scenarios that would beef up local solar generation and battery storage capacity in lieu of gas-burning power plants. Still, models suggest that the reduction in emissions could come at a higher cost to ratepayers, who are already disgruntled over recent hikes to their monthly bills.

AE staff members say the disparity is due in part to the projected cost of battery tolling agreements, in which the utility would pay a monthly fee to a third-party owner to operate leased battery assets. While the Electric Utility Commission argued upfront investments in battery ownership could circumvent these costs, AE claims its constraints as a municipally owned utility could make such investments unfeasible.

Commissioners point out that the utility’s confidence in hydrogen as a financially viable approach seems out of step with their hesitation toward batteries, particularly because the technology has yet to be dispatched in practice. Still, Michael Enger, vice president of energy market operations and resource planning,  maintains that a breakthrough in the hydrogen industry is all but inevitable.

“All I can tell you is that I have developers lined up waiting to invest in hydrogen,” Enger said. “There are a lot of incentives out there at the federal level, and a lot of investors are looking to leverage those incentives. … So while we don’t see a whole lot about it today, there is definitely a lot of money on the sidelines looking to produce if they have the demand, and a contract in place to sell it.”

AE staff and EUC members will continue poring over the data in coming months, with hopes to bring the matter to Council for a vote on Dec. 12. In the meantime, anyone interested can review the modeling outcomes for themselves here and here.

Photo made available through a Creative Commons license. This story has been changed since publication to reflect Austin Energy’s updated stance and to correct a statement about modeling and retiring all coal and natural gas assets by 2035.

The Austin Monitor’s work is made possible by donations from the community. Though our reporting covers donors from time to time, we are careful to keep business and editorial efforts separate while maintaining transparency. A complete list of donors is available here, and our code of ethics is explained here.