The Austin City Council today (Thursday, August 28) gave Austin Energy, its city-owned electric utility, approval to enter into a $2.3 billion contract to purchase all power produced over a 20-year period by a proposed 100-megawatt wood-waste-fueled biomass power plant. The purchase power agreement will move Austin closer to its goal that by 2020, some 30 percent of the power generated by Austin Energy will come from renewable resources.
The biomass plant will be built in Sacul, Texas, about 10 miles northwest of Nacogdoches and will be the largest of its type in the nation. The facility will burn wood waste from logging and mill activity as well as urban wood waste from clearing, tree trimming and pallets. All fuel sources for the plant must meet Texas Renewable Energy Credit standards and Texas Forestry Best Management Practices. It is projected to go on line by the spring of 2012.
Advantages of the Biomass Plant
The biomass plant will provide a firm source of renewable energy, available 24/7. Power from the facility provides a hedge against rising natural gas prices and potential carbon tax legislation. It also provides a hedge against transmission congestion which has begun to significantly increase the cost of transporting wind generated power from west Texas to other areas of the state.
“A firm supply of renewable energy is critical if Austin is to meet the 30 percent renewables goal,” said Austin Energy General manager Roger Duncan. “That goal will be difficult to reach without a power source that is available during peak demand periods.”
Effect on Customer Electric Bills
The cost of the biomass power would be recovered by Austin Energy through the fuel charge or through the utility’s green power program, GreenChoice. Recovering costs through the fuel charge is projected to result in up to a $1.50 decrease to a projected $2.50 increase in the electric bill of the average residential customer beginning in 2012, depending on the cost of other fuels particularly natural gas.
“The projection is that natural gas prices will continue to escalate over the long-term,” Duncan said. “The higher natural gas prices rise, the more this project will save our customers since the biomass-generated power effectively replaces natural-gas-fueled generation for the utility,” Duncan said.
In addition, the cost of power from the plant will be reduced if a federal Production Tax Credit is extended by Congress. It would be further reduced if a State Fuel Grant program approved by the Texas Legislature is funded through subsequent legislative action.
Meeting Renewable Energy Goals
The biomass energy contract will increase Austin Energy renewables to 18% in 2012.
In addition to the goal to meet 30 percent of energy sales through renewable resources by 2020, the Austin City Council has set a goal to offset the need for a 700 MW power plant by that date through energy efficiency. It has also set a goal to cap CO2 emissions from generation and to offset current emissions as well as emissions from future generation through either the purchase of CO2 credits or other means. These goals again support the Austin Climate Protection Plan, one of the most comprehensive and aggressive greenhouse gas reduction programs enacted by any city in America.
The Company that would own and manage the plant
The biomass plant would be built and managed by Nacogdoches Power LLC, a joint venture between Energy Management Incorporated of Boston and BayCorp Holdings of Portsmouth, New Hampshire. The Group has developed and owned or operated more than 1,000 MW of generation in the past including biomass, biodiesel, hydroelectric, natural gas and nuclear. The group has also been selected to develop a biomass project for Gainesville (Florida) Regional Utilities.