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Austin Energy, Gemini ink Webberville solar plant deal

Thursday, August 20, 2009 by Bill McCann

As Austin Energy proposes to ramp up its already-ambitious renewable energy goals, it has sealed the deal on a major solar electric project that was approved by the City Council in March.


Last Friday, Austin Energy signed a contract with San Francisco-based Gemini Solar Development Co. for a 30-megawatt solar power plant on city-owned land near Webberville. Gemini will build, own and operate the plant and Austin Energy will buy the power at an estimated cost of $10 million a year over 25 years.


Construction is expected to get under way early next year and the plant is scheduled to be on line by the end of 2010. The plant, which will be one of the largest of its type in the nation, will use a technology called photovoltaics, or solar cells, made of special materials that generate electrical current when sunlight hits them. The plant will produce enough energy to power about 5,000 homes, while eliminating about 30,000 tons of carbon dioxide emissions a year.


Gemini is a joint venture of Suntech, a major solar cell maker, and Renewable Ventures, which develops, finances and owns solar projects. Gemini has not disclosed its cost of constructing the solar plant.


“This is basically a 25-year, non-escalating power purchase agreement,” said Austin Energy General Manager Roger Duncan. “The city will provide the land, but will not have any investment in the construction or maintenance. We will simply buy the power, which will go directly into our system. “


As with other purchased power, the power that the city buys from the plant will be paid for by ratepayers through the fuel charge on their electric bills, Duncan said.  


When the project was approved by council on March 5, city officials said it would be a significant step toward meeting the city’s goal of getting 30 percent of its energy from renewable sources by 2020, including 100-megawatts from solar. 


Earlier this week, Austin Energy unveiled its newest plan for meeting the city’s future power needs and for reducing greenhouse gases emitted from its operations. That plan recommends that the city invest even more in energy efficiency and renewable energy sources. For example, the plan calls for increasing the renewable energy goal from 30 percent to 35 percent by 2020, including increasing its solar portfolio from 100 megawatts to 200 megawatts.


As the solar plant did last winter, the new plan is being greeted with approval from green-energy advocates attracted to clean energy, and skepticism from business, especially large industrial customers, concerned about the increased cost that solar-generated energy will have on their electric bills.


Duncan acknowledges that solar energy is not cheap, but solar provides a nonpolluting and water-conserving alternative to burning fossil fuels to generate power, he said. The price of solar also continues to come down, Duncan said, and as more utilities invest in it, the price will continue to drop. Because the city has taken the bold step to establish official solar goals, Duncan doesn’t think that the city should wait on the sidelines for other utilities to take the lead in making that happen.


“Our long-term strategy is to buy more solar as the price continues to drop,” he said.


When Austin Energy began studying the 30-megawatt project in 2007, the cost of solar power was about 23 cents a kilowatt-hour, Duncan said. Under the contract, the price will be in the 16 to17-cent range, compared to the average cost of city-delivered electricity of 9.6 cents per kilowatt-hour. While the price of solar power is high, it is not out of line with what it has cost the city to operate some of its natural gas-fired units during times of peak power demand.


“We thought that this was a pretty good deal, and since it is not a lot of power, it would not have a big effect on the fuel charge,” Duncan said.


Austin Energy officials have estimated that the purchased power from the solar plant will add about 1.5 percent to the fuel charge portion of the electric bill each month. For residential customers using 1,000 kilowatt-hours a month, that comes to about 60 cents.  For a large industrial customer, it could mean thousands of dollars a month more, however.

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