The Austin City Council will vote this Thursday (September 17) on a resolution to push Austin Energy one step closer to signing contracts for up to 600 megawatts of solar energy. About 8,000 megawatts worth of proposals have been submitted, some at the lowest solar prices ever seen.
These are exciting times for solar energy – in Texas and around the world. Solar energy is finally cost competitive with fossil fuel-based energy. Utilities that have shown little or no interest in “going green” or being socially responsible are investing in solar. Luminant, Texas’ largest electric generating company, has traditionally invested in coal, but just last week, the company announced its first solar purchase. And in Georgetown, Texas the electric utility has signed contracts for wind and solar energy that it will have a 100% renewable energy portfolio by 2017. In the words of Georgetown Mayor Ross:
No, environmental zealots have not taken over our city council, and we’re not trying to make a statement about fracking or climate change. Our move to wind and solar is chiefly a business decision based on cost and price stability.
It is in this setting that the Austin Council will make its decision. Despite the record low prices, Austin Energy has pushed back against contracting for the 600 megawatts of solar that the Austin Energy Resource, Generation and Climate Protection Plan to 2025 calls for. The plan set a goal of 600 megawatts by 2025, but also states that the utility should contract for up to that amount by 2017, if available and affordable. Clearly it’s available.
The Electric Utility Commission (EUC), whose job it is to oversee Austin Energy, evaluated the impact on rates of contracting for 600 megawatts of solar. The Commission found that it would reduce rates in all but the first couple years and recommended that Austin Energy present its best plan for achieving an additional 600 MW of solar by the end of 2017. So, contracting for 600 megawatts of solar is also affordable.
Austin Energy executives have argued that prices could fall further, but how much they will fall and how fast are unknowns. The 30% federal solar investment tax credit declines to 10% at the end of 2016, so we can count on a price bump after that. As solar prices continue to decline, they will eventually make up for that lost tax credit, but will that be in 18 months, as Austin Energy claims, or longer. Solar companies are especially eager to get contracts right now, so that they can build up their portfolios before the tax credit is reduced. Austin Energy ratepayers could be the beneficiaries of that eagerness, if the Austin City Council decides to take action. If solar is even cheaper in 2018, Austin Energy can contract for more then. Either way, this 600 megawatts of solar, which would supply about 12% of the energy the utility sells, would be an affordable source of energy during times when electricity use, and therefor prices, are highest.
Affordable solar prices should make it easy for the Council to support a big solar buy, especially given that converting to renewable energy is a key strategy in achieving the city’s goal of reducing greenhouse gas emissions to net-zero by 2050, or earlier. Climate change is happening now. For any entity (such as the City of Austin) that claims that addressing the problem of climate change is a priority, passing up opportunities to reduce greenhouse gas emission while also saving money isn’t an acceptable option.
We are asking everyone to wear green to make it easy for the Council members to see how many clean energy supporters are there. We’ll be there starting at 5:30, and will have stickers and talking points for everyone. Parking is free with validation in the garage under City Hall.
