New solar contract tips the scales on Austin Energy’s renewable efforts


Once online, Austin Energy says more than half of the city’s power needs will be covered by renewable energy.

Utility officials say they expect this solar contract to lower customers’ bills.

Austin Energy this week continued its solar power buying spree with a deal on a major new facility in West Texas that represents two milestones for the utility.

Under the deal approved Thursday by the City Council, the utility will buy the solar power produced by a 150-megawatt facility to be built by Intersect Power. Austin Energy would pay $150 million over the life of the 15-year contract, with the option to buy more if the facility is expanded to 180 megawatts.

When this solar array comes online in 2020, Austin Energy estimates that more than half of the city’s power needs will be covered by renewable energy — bringing the utility closer to its goal of covering 65 percent of the city’s power needs with renewable sources by 2027.

And the utility expects this new solar contract will lower customers’ bills.

RELATED: Austin Energy went big on solar power. Here’s how it’s going.

“This is the first solar contract that we’ve done, utility-scale solar contract, where we estimate in the very first year of operation it will actually save us money,” Cyrus Reed, the conservation director of the local Sierra Club, told the City Council on Thursday. “This is really a watershed moment.”

The savings on an individual customer’s bill will be slight, but simply having the bill go down is notable, Austin Energy spokesman Robert Cullick said. In the past, he said, the utility aimed for renewable energy contracts that met the city’s affordability goal, which allowed for bill increases of up to 2 percent per year.

“Solar generally produces electricity at a cost higher than the market,” Cullick said. “This (Intersect Power facility) will be very competitive with the market,” though he said he could not disclose the price under the contract.

A ‘VOLATILE’ MARKET: How Austin Energy traders buy, sell power

Utility and environmental activist Paul Robbins applauded the deal — and told the council he wished it had waited until now to buy more of its solar power so it could have taken advantage of lower prices.

At the council’s direction, Austin Energy has lined up a series of major solar power contracts over the past few years, boosting its solar portfolio from 30 megawatts in 2014 to nearly 800 megawatts by the time the Intersect Power facility opens. (The utility’s green energy holdings also include 1,400 megawatts of wind power.)

Robbins reminded the council Thursday of the 2015 debate when some environmentalists persuaded the council to go big on solar power — ultimately buying about 450 megawatts of solar power at that time instead of a 200-megawatt installment that Austin Energy proposed.

RELATED: Austin City Council takes middle road on solar energy purchase

Robbins had supported the 200-megawatt plan in 2015 because he believed solar prices would come down. He underscored that argument Thursday by citing estimated solar prices of 3.8 cents per kilowatt-hour in 2015 versus about 2.1 cents per kilowatt-hour today.

Robbins said the council’s decision to buy that extra 250 megawatts of solar power in 2015 will end up costing up to $156 million more over 15 years than if the council had waited for today’s prices.

“I have often criticized Austin Energy and will do it again when necessary, but like it or not, they were right on this issue,” Robbins said.

The 150-megawatt contract before the council Thursday earned near-unanimous support, with Council Member Ellen Troxclair casting the only “no” vote.

Cullick said a site has not been selected for the Intersect Power solar array, but it will be somewhere in the vast plains of West Texas, where Austin already has contracts with three massive solar farms and another one slated to open next year.

“This is a very exciting opportunity for us as a city to advance our renewable energy goals,” Council Member Alison Alter said. “I think it’s a good example of how we can achieve sustainability in both our environmental and our economic goals.”

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