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Austin Energy negotiating new long-term wind energy contracts

Wednesday, July 20, 2011 by Bill McCann

Austin Energy officials are negotiating two major long-term agreements with private firms to purchase wind energy that will get the utility closer to its goal of providing renewable energy for the utility at a competitive price. 


The wind projects would supply a total of 291 megawatts of electric generating capacity to Austin Energy, roughly 10 percent of the utility’s total current generating capacity.


Total price tag of the agreements is estimated at about $1.2 billion over 25 years.


The agreements would provide wind power at about the same cost as purchasing natural gas-generated power, according to city utility officials. Unlike other wind projects tapped by Austin Energy in West Texas, the new projects are to be built onshore along the South Texas coast where summer winds blow in the late afternoon and evening when the energy is needed most.


“The timing is right and these (wind projects) are a good fit for us,” Michael Osborne, Austin Energy’s special assistant to the general manager for energy development, told In Fact Daily.


Osborne updated the Electric Utility Commission and Resource Management Commission this week on the projects, which are a result of a request for proposals (RFP) that Austin Energy issued in February. 


Plans call for Austin utility officials to brief the City Council on the proposed agreements early next month and return to the electric utility and resource management commissions at their August meetings to seek their endorsement before asking the Council for final approval later this summer.


More than 70 companies responded to the RFP, providing about 300 different options, Osborne told the Electric Utility Commission Monday. He provided general information on the projects but declined make public the names of the companies involved until negotiations are finalized.


The first project, located on 27,000 acres, would have a generating capacity of 200 megawatts and would go into operation at the end of 2012, Osborne said. The agreement would be for 25 years.


The second one, on 4,500 acres, would have a generating capacity of 90.7 megawatts and would go into operation in September 2012, Osborne said. The agreement would be for 20 years, but could be negotiated to 25 years.  Both agreements would give Austin Energy the option to purchase the projects.


The average price of power for both selected projects would be about 4 cents per kilowatt-hour, a very competitive price that would maintain or slightly lower the utility’s forecasted energy costs, according to Osborne. And unlike the price of natural gas, which could fluctuate significantly, the wind-power price will not escalate over time because there are no fuel costs.


Compared to wind projects in West Texas, the recommended coastal wind projects are expected to produce energy that is more consistent over the year, Osborne said. Monitoring at the sites has shown that the highest wind speeds coincide with peak power demands in the afternoon and evening, he said.


The recommended projects support Austin Energy’s resource plan goal of reaching 35 percent renewable energy by 2020, and when combined with already contracted renewable resources, are expected to increase the utility’s renewable portfolio to 26 percent, Austin Energy General Manager Larry Weis told the utility commission.


Austin Energy currently has agreements for 439 megawatts of wind energy, all from West Texas, but will be losing 77 megawatts to an expiring contract, according to utility staff.  The two new projects, if approved, would bring Austin Energy’s wind total to 653 megawatts.

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