CONCLUSION: Finding True South

A Map for Clean Energy in a Texas Climate

 

Compass rose with sun rays for directionCreating a plan for Austin Energy to rely on 100% clean energy is not a simple affair.  This plan requires maximizing energy efficiency for more than 460,000 individual customers when we have only limited knowledge of the condition of their buildings or the energy-consuming equipment in them.  It partially relies on generation technologies that are not fully commercialized.  It will confront an unsupportive, anti-environmental, anti-regulation mindset that is a signature of Texas politics.  Anyone attempting to cajole you that this goal is quick and easy is either misleading you or misleading themselves.

Some Carbon Hawks may point to cities like Georgetown, Texas, which took the bold step in 2015 of purchasing 100% of their future electricity from wind and photovoltaics, or countries such as Denmark, which has been a world leader in clean energy development.  It is not that simple.

Georgetown’s municipal utility has not generated its own power since the end of W.W.II.  It can buy 100% renewable power on paper, but it is all intermittent power that requires the dispatchable Texas ERCOT grid to back it up.  Denmark gets over 40% of its power from intermittent energy because it often relies on the Scandinavian grid, and imported biomass fuel, for back-up.

It will take considerable time to gather the information for maximum implementation of energy efficiency measures, and to create strategic alliances necessary for commercialization of new clean energy technologies.  It will also take time to publicly present a plan and (presumably) gain public acceptance for the majority of it.

No one person could write such a plan – at least without many years of work.  Instead, this article ends with a summary of steps needed for a transition to clean energy. These strategies could analogously be labeled a “Map.”

1. Establish An Energy-Efficiency Baseline

1A.  Saturation Survey – In any comprehensive energy-efficiency analysis, there has to be a baseline.  Despite Austin’s very long history of operating efficiency programs, it has limited information to accomplish this.  A saturation survey of electric, natural gas, and water end-uses needs to be conducted. Such surveys are common in the utility industry.

This would include the types of lighting, heating, cooling, and water heating equipment, appliances, motors, other commercial and industrial machines, and building shells (windows, insulation, air and duct leakage) to assess their levels of energy consumption and efficiency.

It would also include potential for onsite equipment installation of geothermal heat pumps, hot water heat pumps, building-integrated wind turbines, energy storage, and combined heat and power generators.  This would include assessment of the approximate area available for solar energy on rooftops, and the level of saturation that the local grid can technically accommodate.  It would even include assessments of space available for tree planting that can reduce cooling load.

Optimally, the survey would include information about appliance and building age, owner/tenant status, and in the case of residential buildings, would also include information related to income status.

The completed survey should be available to the public.

1B. Grid Futures Study – The assessment of a regional energy grid like ERCOT to maximize renewable energy technologies, along with transmission infrastructure and possible energy storage to accommodate it, is an extremely complicated endeavor.  To guarantee seamless power every second of the year averaged over at least 3 years conveyed over 4,000 ERCOT transmission nodes from 10 different state climate zones could require billions of separate computer simulations.

Even relatively simple evaluations to estimate the amount of money to accommodate the transmission facilities needed to carry just the near-term planned growth for solar cells has, to date, not been conducted.

Austin Energy, in cooperation with ERCOT and key academic institutions, should help start and co-fund this process.

1C. Geothermal Water-Resource SurveyA survey of water temperatures that can be economically harnessed for geothermal heating and cooling needs to be conducted at well sites and for  water tables near or beneath Lady Bird Lake, Lake Austin, and Lake Travis.  Successful harvest of water temperatures can magnify energy efficiency, with particularly large potential near downtown Austin.

2. Technical Review Task Force – The idea of a blue-ribbon commission to advise on how to achieve a clean-energy grid is a good concept.  However, if this idea is to be seriously pursued, it needs to focus on technical and economic evaluations and merits, and given the challenging assignment, needs to meet regularly for up to 12 months.  It further needs adequate technical and staff support funded by Austin Energy, a shortcoming of several past efforts.

After completion, this commission’s report should then be subjected to the scrutiny by Austin’s various political constituencies.  While public support is vital if any of the new report’s recommendations are to be implemented, technical ability to implement the report’s recommendations needs to be its foundation rather than an afterthought.

3. Specific Energy-Efficiency Initiatives

3A. Residential and Commercial Rental Programs – Despite Austin’s long-running energy efficiency efforts that span decades, efficiency programs nationwide still struggle to find effective ways to reach the residential and commercial rental sectors.  They struggle to impact:

• building shell, duct, and Heating, Ventilation and Air Conditioning (HVAC) retrofits of 1 to 4 unit residential rental dwellings;

• HVAC retrofits in residential rental buildings with more than 4 units;

• efficiency retrofits for commercial rental space.

These low-participation sectors and end uses will need new strategic approaches, including targeted education, marketing and outreach, and creative financing options.  Without this, efficiency programs will continue to fail to achieve their full potential.

3B. Effective Low-Income Energy Programs – Between Austin Energy’s Customer Assistance Program (CAP) bill discounts, free weatherization efforts, and multifamily conservation rebate program, it spends more per customer on low- and moderate-income customers than any other utility in Texas.  However, some of what is spent should be retargeted in a way to save more money and energy for these customers.  These include the following policies.

• Redirect some of the money meant for free weatherization to direct-installation programs.  Door-to-door installation of LEDs, smart thermostats, pipe wraps, and low-flow showerheads save much more money per dollar invested.

• Eliminate CAP discounts for high consumption, which encourages waste. CAP awarded $2.2 million to consumers using over 1,500 kwh per month in 2015.1

• Income-qualify CAP customers instead of automatically enrolling them.  It is more accurate and less expensive to administer.

Money saved from the last two strategies can be spent on other initiatives to help the poor.

3C. Inspecting the Building Inspectors – Construction of new buildings to heightened standards of energy and water efficiency is the least expensive way to achieve savings.  Building codes are designed to save more in energy costs than the cost of the improved materials and building science. Retrofitting a poorly built structure will rarely capture the potential savings of doing it right the first time.

Even though Austin Energy contributes money to the building inspection budget of the City of Austin to enforce the energy building code, it is not clear how well this is being accomplished.  Code officials are often overworked and expected to “inspect” far more buildings every day than humanly possible.

An audit needs to be conducted to ascertain how well the code is enforced.  If deficiencies are found, this audit should be conducted on a routine basis.  If deficiencies are found to be chronic, code enforcement should be transferred to another agency or given funding for adequate personnel.

4. Review of and Collaborative Investment in New Technologies – The Energiewende effort by Germany probably did more to commercialize wind and photovoltaic electricity than any other program, event, or strategy in the world.  However, Germany’s relatively large population and economy have been pivotal in creating economies of scale.  Austin, by itself, does not have the economic spending power necessary to create an anchor market.

Austin should help create a large-scale collaborative effort with other utilities, institutions, and governments to accelerate the commercialization of alternative energy development.  While it would be premature to recommend the specific technologies and directions to pursue, Concentrating Solar Power will probably be an essential technology in Texas for dispatchable renewable electricity.  CSP would be relevant to energy production in Southwestern and Pacific states, which use about a quarter of U.S. electricity.

Part of the funding might come from a voluntary subscription on the electric bill, similar to Austin Energy’s popular GreenChoice rate.  A mandatory surcharge on the electric bill will also be necessary, but might be partially offset by revenues from the renewable power plants built with the funds.

5. Buying the Biomass Plant – Purchased electricity from the Nacogdoches Power “biomass” plant costs Austin Energy $54 million, plus fuel and variable Operation and Maintenance if it actually generates power.  This outrageous cost politically affects Austin’s ability to invest in other renewable baseload options that might be more expensive than conventional power but less costly than this plant.  It also negatively influences how much Austin can invest in Research & Development of other clean energy technologies.  Moreover, the expensive contract does not expire until 2032.

Austin should seriously consider buying the plant from its current owner.  While this may seem counter-intuitive, placing the partially depreciated plant under low-interest municipal debt may be less costly than paying the contract for the remainder of its term.  Depending on the price, it may even be cost effective to run the plant more often, allowing Austin to receive a greater percentage of its electricity from dispatchable renewable energy.

6. Local Renewable Investment Option – Local ownership and control of energy production and prices is why Austin Energy and so many other public utilities formed to begin with.  However, due to the current federal tax incentives given to private companies that build wind and solar plants, it is rare for public utilities to own them.  Public utilities must buy renewable power from private companies under contract because they cannot compete.

Austin Energy should require developers of new renewable purchase power agreements to set aside a certain percentage of ownership to individuals, companies, and pension funds located in Central Texas.  While not the same as ownership by all utility customers, it is an indirect way for Austinites to have some stake in their future.

7. Restoration of Voter Approval for Austin Energy – Article 7, Chapter 11 of the Austin City Charter states that utility revenue bonds must be approved by a majority of voters.  Between 1890 and 1998, voters were asked to authorize bonds 33 times.2  A legal decision in 1984 determined that the Council had the right to issue revenue bonds without voter approval, but did not have the obligation to.  For many years after this, elections continued to be held.

There was no official reason why they stopped after 1998, but one contributing factor is that some bureaucrats and elected officials do not believe in this level of public participation.

Austinites should reclaim their right of self-determination for their economic and environmental future.  Not only should voters be allowed a voice on conventional power plants, but the Charter should be revised and expanded to allow voters to approve long-term power contracts, the current method Austin’s utility uses to buy renewable energy.

8. Natural Gas Purchasing Policies for Cleaner Drilling – Despite environmental harm stemming from gas extraction, its use is not going away in the immediate future.  In 2016, 44% of ERCOT’s generation came from this one fuel source.3   Austin Energy should leverage its purchasing power to give a preference to gas drillers that meet a set of environmental standards.  These standards would be third-party certified.

These requirements should include water and chemical reductions in fracking fluids, air emissions control, limiting methane emissions, wastewater and solid waste reduction and control, emergency notification provisions, and nuisance mitigation for neighbors.

9. Energy Storage Policy – To accommodate large amounts of intermittent renewable energy that is likely to be built in Texas, Austin Energy needs to take steps to encourage or construct energy storage.  Currently, the most cost-effective technology to offset electricity is thermal energy storage (TES) – ice, chilled water, and hot water stored on site.

The utility needs to determine the environmental benefits of large-scale storage specific to the ERCOT grid, the energy savings or loss, and how much value TES can add to intermittent renewable energy.  If the results are positive, then the utility should: 1) determine the commercial customers in the service area that TES is suitable for; 2) implement mandatory time-of-use rates for these customers.  The most likely candidates, at least in the beginning, are low-rise grocery and retail centers with a large land footprint, and new large buildings with a high variable load (where adequate space for TES can be planned).

Currently, the most cost effective technology to store electricity is Compressed Air Energy Storage (CAES), which was discussed in detail earlier in this article.  It is important to note that the heat for the first CAES plant in Texas will likely be produced from natural gas.  While this strategy is not carbon-free, carbon emissions are still greatly reduced.  It is important to build the first plants so that the technology is improved in later ones.

A transition strategy for this technology is to diversify risk.  There are only two commercial CAES units in the world at this time.  While the process uses off-the-shelf components that are well tested, CAES has to be built to scale to be cost effective, with many utilities and merchant generators reluctant to finance the first plant built since 1991.  If a CAES plant does not make a profit, hundreds of millions of dollars could be at risk.

To manage this risk, Austin should partner with other utilities to construct the first Texas plant.  If it fails, no single company or agency loses a lot of money. If the first plant succeeds, it can be replicated.

10. Progressive Rate Policy – In 1981, Austin’s electric utility adopted the first inverted Residential rate structure in Texas.  (With inverted rates, the more you use, the more you pay.)  This provided a “lifeline” block for the first 500 kilowatt hours, with prices higher for consumption above it.  In 2012, Austin went further and created a more steeply tiered rate structure with 5 separate blocks.  There is still more conservation potential to come from alternative tariffs.

One alternative rate strategy is to charge peak demand rates for apartment buildings that are individually metered, similar to the way demand is charged for larger commercial customers. This demand charge would be the responsibility of the building owner or landlord.

Since most multifamily buildings in Austin are individually metered, tenants have an incentive to more carefully use utilities.  However, the landlord has little incentive to make investments in efficiency.

Adding peak meters to apartment buildings will pass on some of the electric costs to the owner, who would have more motivation to install efficiency measures.  Since the proposal is market based, it would not garner the same intense opposition from owners as conservation mandates.

Other innovative rate strategies include prepaid and Time-Of-Use Residential rates.  While discussed in Austin for many years, Time-Of-Use rates have lacked momentum, and prepaid rates have been attacked by low-income advocates because they believe the rates place the poor at a disadvantage.

Concerns related to the effect of prepaid rates on the poor have already been dealt with by utilities that have used them for many years.  If Austin is to reach a goal of 100% clean energy, it will need to employ as many strategies as possible.  The City will need to construct solutions, rather than continue to stall them.

11. Positions on National Energy Issues – In contrast to its assertiveness in advancing clean energy locally, Austin Energy has been relatively shy about influencing state or national policy in pursuance of its goals.  While Austin can only affect such policies to a degree, it will have more influence if it participates than if it stays silent.  Three issues discussed below are examples of where Austin Energy has stayed relatively silent even when the issues affected its future.

Capacity Markets  In some wholesale markets, including the Texas ERCOT system, electricity is sold in an “energy only” market that does not acknowledge the value of dispatchable generation.  More expensive dispatchable renewable energy options such as Concentrating Solar Power, biomass, and renewables with storage are placed at a competitive disadvantage compared to intermittent wind and PVs.

During 2016, even new efficient gas units were not economic to build because ERCOT would primarily acknowledge only the (temporary) low cost of natural gas in existing generators.  A number of power plants selling in ERCOT could not get part or all of their capital costs recouped.  This is not sustainable, and future pricing policy needs to reflect this.

Gas Exports – At this point in time, natural gas is the most flexible and environmental option to integrate intermittent renewable electricity (compared to nuclear and coal).  While fracking has profoundly expanded the U.S. gas supply, a gas export infrastructure is being built to sell the relatively low-priced fuel overseas at a profit.  This will inevitably raise the cost of domestic electricity.

Austin Energy lodged no protest during the time Liquefied Natural Gas plants and export pipelines were being permitted.  While it is unlikely that any more LNG export plants will be built in the short term, Austin needs to organize with like-minded utilities and institutions to keep the situation from getting worse.

Renewable Energy Tax Credits – In 2013, about 27% of all the electricity sold in the U.S. was sold by public utilities (municipal utilities, coops, and power authorities).4  However, federal renewable energy tax credits grant such large subsidies to private companies that invest in wind and PVs that public utilities cannot compete with them.

While the federal tax credits have played a pivotal role in bringing the cost of renewables down through economies of scale, they also work to the detriment of public ownership.  How can anything be more public than the wind and sun?

If the tax credits are extended in the future, Austin Energy and its allies in the public sector need to lobby for the same discounts for municipally built projects.

Endnotes

1 Information from Mark Dreyfus, Vice President, Regulatory Affairs & Corporate Communications, Austin Energy, on February 16, 2016.

2 Information from 31 elections compiled from City of Austin Election History Web site: www.ci.austin.tx.us/election/search.cfm.  Added to this were results of elections on utility bonds in 1890 and 1894.  (See Robbins, Paul, “Headwaters,” Austin Environmental Directory 2013, pp. 129-130.)

3 Electric Reliability Council of Texas, ERCOT Quickfacts, Austin, TX, January 2017.

4 American Public Power Association, 2015-2016 Annual Directory & Statistical Report, Washington, DC, U.S. Electric Utility Industry Statistics. Online at http://www.publicpower.org/files/PDFs/USElectricUtilityIndustryStatistics.pdf

Artwork:

Compass Rose Sun: iStock.com/iatsun

Compass Icon: istock.com/bert_phantana

Plaza De Los Ventos: iStock.com/Ildo Frazao