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Consultant endorses gas plant after study

Tuesday, November 17, 2015 by Tyler Whitson

Navigant Consulting, which the city hired to review the 500 megawatt natural gas plant proposed in the Austin Energy generation plan, has recommended the project.

Dan Bradley and Matt Tanner, two of the report’s authors, presented the results at an Electric Utility Commission meeting on Monday evening, a few hours after Austin Energy released the report online.

“Our recommendation to (City) Council on the basis of the benefits and costs and impacts of each of the scenarios we assessed is that AE build the Gas Plant in the AE load zone to replace the Decker Creek Power Station’s steam units when they are retired, and to support the planned retirement of (the Fayette Power Project),” Bradley wrote in his presentation.

The study compared the economic viability and climate impacts of the combined-cycle natural gas plant with several renewable alternatives.

Navigant looked at seven portfolio scenarios: one in which the city does not replace its retiring generation and buys power on the market, two in which it builds the gas plant at different sites, one in which it invests in 500 MW of solar, one in which it invests in 500 MW of wind, one in which it invests in a renewable mix and one in which it accelerates its solar investments.

The Austin Energy Resource, Generation and Climate Protection Plan calls for the utility’s portfolio to include 55 percent renewable sources. It calls for the retirement of the Decker Creek Power Station’s natural gas-fired steam units and Austin Energy’s stake in the coal-fired Fayette Power Project, with the 500 MW gas plant coming online in 2018 if approved by Council.

While the gas plant won the endorsement of the consultant, that determination appeared to have more to do with the higher risks involved with the renewable alternatives than with the costs.

“All of the portfolios performed within a tight band of results over the 20-year period, and the gas plant – being that it would be sited within the Austin Energy load zone at the retirement of Decker – shelters Austin Energy from some of the local transmission congestion risk that you’d face in the (Electric Reliability Council of Texas) market,” Bradley told the Austin Monitor.

Austin Energy operates in a deregulated environment, meaning that it buys and sells power into the ERCOT market, which covers about 90 percent of the state. That market is broken down into “load zones” based on regional energy transmission infrastructure.

The two proposed sites for the gas plant are in Austin Energy’s load zone, Bradley explained, whereas much of the state’s solar and wind generation is generally built in other parts of the state, making it more likely that power flowing in would face transmission congestion.

In addition, Bradley said, wind and solar are nondispatchable – they can’t necessarily be turned on or off when needed because they depend on environmental conditions – and therefore are not as good at mitigating risk as dispatchable sources such as gas plants.

“The results between the portfolios assessed are very close,” wrote Bradley, but the gas plant scenarios “resulted in the best mix of value and risk mitigation among the portfolios studied.”

This could change in the future, however. “Given the pace of change in renewable and storage costs, AE should continue to monitor and consider these resources,” Bradley wrote.

Navigant also studied the potential environmental impacts of the different alternatives. Under all of them, the authors projected, Austin Energy would reach its upcoming goal of reducing carbon emissions by 20 percent from 2005 levels by 2020. Under all scenarios that involve investing in more resources, sulfur dioxide and nitrogen oxide emissions are projected to decrease.

To the surprise of many, Navigant projected that the renewable alternatives would actually result in higher sulfur dioxide and nitrogen oxide emissions than the gas plant scenarios. Tanner said that this is because Navigant expects the utility would purchase more power on the market, which has a high concentration of coal, if it were to go with renewable alternatives.

In the case of water use, however, Navigant projected that the gas plant alternative portfolios would result in approximately 15 percent more water use than the renewables-based portfolios.

For each of the portfolios, Navigant looked at four different market scenarios: a “base” scenario that follows current projections, one in which natural gas prices are lower than expected, one in which natural gas prices are higher than expected and one in which there is high solar energy penetration in the market.

Whether the city will move forward on the gas plant will be up to Council, which will likely take up the issue next year, though the Council Austin Energy Utility Oversight Committee may hear a briefing on it in December.

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