Austin Energy has relied almost entirely on wind to propel its march toward the city’s renewable power goal.
But to ensure reliability and affordability, Austin Energy will need to diversify its portfolio beyond wind to reach its goal of getting one-third of its electricity from renewables by 2020, said Michael McCluskey, the utility’s deputy general manager.
Two new wind contracts, the first of which starts in 2008, will more than double the amount of wind power Austin Energy has reserved for its long-term use.
That infusion will bring renewables to 11 percent of the utility’s total fuel mix. Almost all the renewable power comes from wind; solar energy and landfill-generated methane gas provide the rest.
Since 2001, Austin has been gobbling up electricity generated by West Texas wind turbines because the cost was competitive and the utility could secure stable, long-term prices.
Those long-term contracts meant that as natural gas prices rose, the cost of wind did not change.
At one point, customers in Austin Energy’s GreenChoice program, which allows consumers to choose to get their power from renewable sources, were paying less than the standard fuel charge.
The cost of wind is rising, though, because of increased demand and escalating construction costs, McCluskey said.
Under new wind contracts, GreenChoice customers will pay 5.5 cents per kilowatt-hour, which is 57 percent higher than the most recent suscribers to GreenChoice pay. A typical residential customer would pay about $18 more per month under the new GreenChoice contract compared with customers paying the standard monthly fuel charge, which will be 3.65 cents per kilowatt-hour beginning Jan. 1.
For the utility, wind’s biggest limitation is that it cannot be depended on to blow all the time. It tends to gust mostly at night, particularly in late fall and early spring.
The Electric Reliability Council of Texas, which operates the electric grid for most of the state, has determined that only 8.7 percent of the state’s installed wind capacity can be relied on in periods of peak demand.
So to ensure that the lights – and air conditioners – stay on during hot summer afternoons, utilities must have backup conventional power sources, such as natural gas, that can be turned on quickly, said Bill Bojorquez, ERCOT vice president of system planning.
ERCOT is in the process of determining how much wind power the system can take, given the need and cost for a backup supply. Completion of that study is expected in the spring.
Even though wind is not always available, it helps conserve natural gas when it does blow, McCluskey said.
To diversify Austin Energy’s renewable power sources, McCluskey said, biomass is one option the utility is eager to see develop because the electricity generated from it is constant and controllable. Biomass is organic material made from plants and animals that releases heat when burned that can be used to generate power. Plants fueled by biomass can serve the utility’s constant level of demand, the same as nuclear and coal-fired plants.
It is an attractive option, but the price of biomass is not yet competitive, McCluskey said.
Wind has an advantage in the renewable market because it gets a federal tax credit that lowers the price, said Tony Callendrello, vice president of Nacogdoches Power LLC.
The company is developing a Nacogdoches County generating facility in East Texas that is fueled by forest residue, logging waste and wood milling waste. Commercial operation is expected in 2009.
As a biomass producer, you are “starting off with one hand behind your back,” Callendrello said. “If there was parity on the production tax credit, we would close the gap.”
Company officials have been talking to Austin Energy about it becoming a customer, but a decision has not been made.
By Kate Alexander
23 December 2007