Austin Energy Needs More Than Hot Air

It’s not enough to focus only on those creating cleantech startups; equally important are the buyers of all these clean technologies. So I decided to talk to one right here in my hometown of Austin, Texas: John Baker, chief of strategy at Austin Energy. Baker’s been tasked with creating a portfolio of clean electricity technology that will provide 30 percent of the utility’s power by 2020. Right now, only 6 percent of Austin Energy’s power comes from renewable sources, but that doesn’t stop it from being an innovator, as far as utilities go. Baker spoke with me about the types of technology Austin Energy is looking for, and the state of the market for buying green power.
Q) What do you guys have in your portfolio now?
A) Since 2000 we have had wind power in our portfolio, and currently we contract for 226 megawatts of wind power. By the end of 2009 we will have two additional contracts for 446 megawatts. But wind cannot get us to our 30 percent goal by 2020, and so we’re also following other technology developments closely.

Q) What other technologies are you looking at?
A) We’re seeing a lot of rapid movement in solar, but the economics for solar are better in California, where grid prices are higher, than they are in Texas. However, we’re seeing a lot of developments that are moving pretty quickly and are showing a move toward less expensive technology. Concentrating solar thermal plants have had quite a rebirth lately, and that has potential as it reaches economies of scale that will allow it to come down in price. To round out the solar front we’re paying attention to the thin-film technology. It seems like the technology is moving pretty quickly and we should be expect price movement to follow that in the near term.
We’re interested in biomass as well. There is limited potential in Texas right now for biomass and we’re talking to a couple of folks to see if it’s doable. The thing that’s attractive about it is you can keep an inventory of the fuel and stockpile it, so you have more control over converting it to electricity at a time when it’s needed. So if you have a reliable source of biomass you can move the energy capacity up to that of a conventional plant. As long as there is a fuel source in enough abundance to feed the plant and if we can strike the right deals and get us in the area of our ballpark prices, it could be an option.
Q) Price is obviously important to the utility, so where are prices on various contracts today, and when might price be outweighed by other considerations?
A) The price of wind has gone up since 2000 and so we’re now paying about twice as much for wind than we were back then. It’s gone from a buyer’s market to a seller’s market today. Wind projects are going up across Texas and there’s a high demand for equipment such as turbines and more demand in the marketplace for the energy. I don’t want to talk specifically about our contracts, but we were paying about 3 cents per kilowatt hour in the beginning and a typical price today on wind is about 5 cents to 6 cents per kilowatt hour. Solar is the most expensive, with some contracts for as much as 25 cents per kilowatt hour, and biomass is in between solar and wind.
Q) What has been the reaction to Austin Energy’s longstanding environmentalism among your peers in the utility industry?
A) The whole notion in the industry and the perspective on the carbon issue has shifted to the forefront in the last 12 to 18 months, where the industry realizes it has to deal with this. I would say Austin Energy has sort of moved from being out on the bleeding edge and now we’re coming to a point where people are saying we’re clearly moving in a direction that makes sense. I think that’s a big change. In the past it was probably more like, “Why would you want to do anything Austin is doing?”
I should also say there are a number of other utilities at the forefront of pursuing renewable energy as well, such as the Sacramento Municipal Utility District, Seattle City Light and the Los Angeles Department of Water and Power.