Austin Energy close to signing deal for coastal wind power 

For much of the past decade, Austin has relied mostly on wind from West Texas to achieve renewable-energy goals, even as city officials warned that it mostly blows at night, when people need electricity the least.

Now Austin Energy officials say they are close to a deal to buy more wind that would overcome that shortcoming.

The city-owned utility is close to inking a pair of contracts to pay about $50 million a year – the final amount is still under negotiation – for electricity generated by two companies building large-scale wind farms along the Texas coast. Wind there tends to blow mostly during the afternoon and early evening, when the city needs it most, even in summer, according to utility officials examining the offer.

It would be Austin’s first major energy purchase since the city adopted an aggressive plan 15 months ago to invest heavily in renewable energy. Assuming the City Council gives its thumbs up in August or early September, Austin would be part of a wind boom along the coast happening partly because turbine manufacturers are producing models with larger blades that are better able to harness the less intense winds blowing there.

At 4 cents a kilowatt hour – roughly what natural gas is now going for – the coastal wind is about as cheap an electricity source, renewable or otherwise, as Austin Energy officials say they could find. The deal will not raise rates, according to an Austin Energy analysis.

“It’s a good market for wind right now,” General Manager Larry Weis said. “I think when our customers hear what the cost is, they’ll be really pleased with it.”

The deals would take effect in 2013 and last 20 to 25 years. The names of the companies involved are not being released.

The two wind farms would provide a combined 291 megawatts of power, adding about 10 percent to the city’s generating capacity.

Austin Energy had rejected several previous coastal-wind proposals because they were too expensive. But now both Austin and San Antonio’s CPS Energy have deemed coastal wind cost-effective.

By way of comparison, the operators of the South Texas Project nuclear facility had approached Austin earlier this year about investing in an expansion of that facility. But NRG Energy’s emissaries were floating a price around 8 cents per kilowatt hour. Austin Energy officials were skeptical, and the deal fell apart before negotiations could begin because one of the deal’s backers, Tokyo Electric Power Company , owns the Fukushima Daiichi nuclear plant that was hit by the tsunami earlier this year.

Utility officials caution that coastal wind doesn’t blow all the time even during peak afternoon hours, so the city cannot rely on it exclusively. Even with the new wind contract, the city sometimes will still need to buy electricity on the statewide market, the officials said. But Michael Osborne , who is negotiating the contracts as a special assistant to Weis, said coastal wind is more reliable than generally thought.

“This wind is intermittent, like a wave on the beach,” Osborne said. “But like a wave on the beach, it’s pretty predictable.”

Weis said the coastal wind would also put the city within striking distance of its 10-year renewable-energy goals.

By 2020, the city wants to get 35 percent of its electricity from wind, solar, wood waste and other renewable sources. Between the two coastal-wind farms; a solar facility expected to come online this year; and an East Texas wood-waste plant expected to begin producing next year , Austin will be at 26 percent renewable energy by 2013.

City officials say they want to encourage the spread of solar power and other types of renewables, but they have a powerful incentive to prefer wind now. Electric rates are scheduled to rise 12 percent next year, with solar and wood-waste plants partially responsible. Austin’s 10-year plan calls for keeping rate increases to 2 percent after that, and wind is now the cheapest renewable widely available.