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City Council approves contract for 30MW solar plant

Friday, March 6, 2009 by Bill McCann

The Austin City Council took a significant step Thursday toward the city’s lofty goal of getting 30 percent of its energy from renewable sources by 2020, including 100 megawatts from solar energy.

 

The council voted unanimously to award a contract to San Francisco-based Gemini Solar Development Co. to build a 30-megawatt solar power plant on 350 acres of city-owned land about 20 miles east of Austin near Webberville. Gemini will build and operate the plant and the city will buy all the power for an estimated $10 million a year over 25 years. Scheduled to be operating in late 2010, it will be the largest of its type in the nation. It will produce enough energy to power about 5,000 homes a year.

 

The plant will use a technology called photovoltaics or solar cells, which are made of special materials that can generate electrical current when sunlight strikes their surface.

 

While the solar project supports renewable-energy goals set by the council, its approval has not been a slam-dunk. The project has had its share of enthusiastic supporters who say it is a good deal and detractors who say it is too expensive. The solar power will not be cheap, adding about 1.5 percent to the fuel charge on electric bills, according to Austin Energy. That comes to about 60 cents a month for a residential ratepayer using 1,000 kilowatt-hours a month, but it could add thousands of dollars monthly to a large industrial ratepayer’s bill. (The actual price that Austin will pay per kilowatt-hour for the solar-generated energy is not public to protect the contractor in the competitive market.)

 

Plus, the solar panels installed by Gemini will be made in China, upsetting some startup solar companies that wanted a piece of the action. Austin Energy officials responded that they are bound by state purchasing laws that require going with the lowest bidder. In this case, there was a significant gap between Gemini, the low bidder, and the next lowest bidder.

 

Council delayed a vote three weeks ago at the request of Council Member Mike Martinez to take another look at the cost and ways to bring it down in response to cost concerns.

 

To supporters, the project will provide a viable, nonpolluting alternative to fossil-fuel power, such as coal and natural gas-fired plants. The project will be producing the most power on hot summer afternoons, coinciding with the highest demands on Austin Energy’s electric system. Unlike wind plants in West Texas, the project will be unaffected by power line congestion in transmitting the power to where it is needed because it will be nearby. Also, the price of the power produced at the solar plant will be locked in for 25 years, and not subject to wild price fluctuations such as seen with natural gas.

 

However, detractors, especially some high-tech companies, have been concerned that the project will mean higher electric rates and affect their bottom lines. Representatives of Freescale Semiconductor and Spansion, which recently filed for bankruptcy, expressed those concerns again Thursday and told the council that they felt they have been left out of the city’s planning process for renewable energy. 

 

They urged the Council to create a special stakeholder process that would give the large industrial customers a greater say than residential customers and environmentalists. When consumer advocate Paul Robbins got up to speak he voiced the fears of solar energy proponents that the large customers would have not just a say in the process but “veto power” over future green energy projects.

 

He pointed out that the large industrial customers had gotten a rate cut several years ago that left them paying lower base rates than any other class of customers. “How low do they want us to go?” Robbins asked.

 

In response, Council Member Lee Leffingwell, who made the motion to approve the project, added several conditions in the motion, including:

 

  • establish a stakeholder process involving a task force representing diverse interests to review future renewable energy plans,

  • stipulate that federal stimulus funds or other future federal monies that Gemini receives for the project would be passed back to the city to help reduce the cost of the project on ratepayers. This is similar to a stipulation included in a recent biomass energy project approved by the council.

  • include the project in the city’s GreenChoice program in which participants pay a specific fixed price for green power for a specific period, as a substitute for the fuel charge, which can fluctuate. If enough customers choose to participate, it can have the effect of reducing the fuel charge—although that seems less likely than in the past with lower cost programs.

Austin Energy and Gemini have been looking at potential federal assistance as a way to help reduce the costs of the project, Austin Energy General Manager Roger Duncan told the council. A federal investment tax credit that Gemini is to receive for the project already has been factored into the price, he said. Based on a review by Gemini, he said, the federal stimulus money would not affect the project. However, if funding is found, Gemini has agreed to share the value with Austin Energy.

 

Overall, Duncan said, Austin will be getting a “very good price” for the power produced by the solar project. In fact, it will be only slightly higher than the cost of operating natural-gas units used to meet power demands during times of peak use, he said. “We haven’t seen this price for solar in the nation before.”

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