Cool City: Solar Subtleties
Cost of solar array depends on how you look at it – and when
By Katherine Gregor, Fri., March 6, 2009
Public questions linger about the city's proposed $250 million solar-power-purchase agreement – the first step toward becoming a partially solar-powered municipality, as required by the City Council-mandated Austin Climate Protection Plan. The shift to solar involves many complexities; Austin Energy thus far has shared only the bare outlines. Before council takes a vote on accepting the low bid from Gemini Solar today (Thursday, March 5) or March 12 (to lock in a guaranteed price), I took some questions to Austin Energy General Manager Roger Duncan.
Solar power is getting more affordable as technologies improve, but it's still very expensive. At the Feb. 12 council session, Council Member Mike Martinez questioned Duncan on whether solar power, like wind power, could be sold as separately priced GreenChoice energy. GreenChoice customers lock in a fixed rate, based on the cost of wind power; GreenChoice rates have been more expensive initially but a bargain over time. "Yes, we can do that," Duncan responded, but he didn't offer details on how high the price to self-selected customers would need to be to cover the full contract cost.
Indeed, a 100%-solar GreenChoice package would be so expensive, Duncan said later, "I wouldn't expect it to be fully subscribed." If solar GreenChoice were offered but not fully subscribed, the remainder of the 25-year contract cost would roll into the overall fuel charge; if it weren't offered at all, AE would simply add about $10 million to the citywide fuel charge annually – yielding a rate hike of about 60 cents per month for the average household.
If AE did decide to offer a solar GreenChoice option, how hefty would the premium be, above the standard AE fuel charge? An average, non-GreenChoice Austin household, consuming 1,000 kilowatt-hours a month, currently pays a $36.50 fuel charge – 3.65 cents per kwh. (AE adds a fuel charge to a base energy charge to yield the total cost of electricity – currently averaging 9.6 cents per kwh for standard residential customers.) The same customer selecting a 10-year GreenChoice subscription today would pay $58.50 more per month, or $154.50 total. (Wind power is currently charged at 9.5 cents per kwh – transmission congestion has recently driven up the cost.)
Duncan isn't at liberty to disclose the cost per kwh of the Gemini Solar deal, although he told City Council that if the solar power were sold only on a subscription basis, the cost would likely discourage many potential subscribers. He did note that activist Paul Robbins estimated the broad-based solar cost alone at 16.5 cents per kwh, then added with a smile, "Paul's good." AE plans to return to council with a possible solar or solar-plus-wind blend that, including all base charges, could run as high as $225 a month. Who besides Brewster McCracken is going to jump for that? So while solar GreenChoice might offer enviro public relations, it's unlikely to cover much of the expense – unless perhaps as a diluted, part-solar batch.
A Cloudy 30 MW
Local solar critic Robert C. Duncan (a research scientist in UT's Department of Astronomy and no relation to Roger) recently scolded the utility for describing the proposed Webberville solar farm as a 30-megawatt facility ("Postmarks" online, Feb. 27). As he correctly points out, that's based on a peak production number – achieved only on a clear, sunny day in late afternoon. By his calculations, the real average generation will be between 6 and 7 megawatts per year. AE's General Manager Duncan confirmed the principle: The plant will generate power about 23% of the time. (Dividing the 25-year cost of the system by the total kwh it will generate over that same period is what yields the 16.5 cents per kwh estimate.) Citing the proposed facility's 30-MW rating isn't misleading, he said; maximum production is how the industry rates every type of power plant, akin to citing the horsepower of a car. (Coal plants don't generate at full capacity 24/7 either.) But critic-Duncan believes that citing 30 MW greatly masks the true cost per megawatt of the solar power. (The UT physicist, who says he is deeply concerned about global warming, advocates a sizable nuclear-power-purchase agreement instead, to more dramatically reduce the city's greenhouse gas emissions by 2020.)
AE's Duncan said he looks at it differently. For peaking power – needed on the hottest summer days – the utility in fact pays 12 to 14 cents per kwh for power from gas turbines. "That's the energy that solar competes against," he said. The solar farm can replace up to 30 MW of that power, at a rate locked in for 25 years, while natural-gas prices rise. In addition, a new federal cap-and-trade program, or tax on carbon emissions, will raise the effective cost of fossil fuels, further favoring solar. Said Roger Duncan, "Within five years, the lines should cross – we won't be paying a premium for solar – it's going to be a savings."
"We do have a Climate Protection Plan!" Roger Duncan also emphasized. "The council mandate did not say, 'Don't do anything for climate protection until it's cost-effective!' It said we need to be using 100 megawatts of solar power by 2020." He now sees the potential for AE to far exceed that goal, perhaps hitting 1,000 MW.
Wait, or Buy Local?
Martinez, UT's Robert Duncan, and others have also questioned why the city doesn't wait until 1) the price falls further, 2) it can do a bigger array, or 3) it can more directly use the emerging local solar industry. AE's Roger Duncan responded to each point. "We've already waited two years to add solar generation, until the price became more competitive with peaking power," he explained. In putting it on the grid, stability concerns dictate starting small. "We need to start learning to deal with a large volume on a distributed system. We need to gain that experience," he said, so that one day AE can draw on numerous solar arrays around town. Locally generated solar power avoids the long-distance transmission problems that plague wind, but, "there are dynamics involved in distributed generation [electricity from many small sources] that we just don't have experience in yet."
As for buying local, Roger Duncan is all for it: "But state law would have to change. I can't just buy local under state purchasing laws." Gemini Solar is based in San Francisco; its panels, like virtually everything else, are made in China. No Austin companies now manufacture solar panels (or bid on this pending contract); HelioVolt will have its Austin factory in production within a year, although it won't make 30 megawatts' worth next year. But Roger Duncan feels a pressing need to get AE's solar show on the road. He's all for growing "green-collar jobs," too – but no one has made economic development initiatives the job of the electric utility.
Some local businesses are advocating that the solar project be built in stages, in theory allowing the local manufacturing sources to be developed that could supply the full array; their proposals are summarized on the Web at www.10-10-10plan.com.
"I preach diversity," said Roger Duncan. "We need a variety of sources, even within solar, because they all have different characteristics." Those technologies are evolving every month. That's why Roger Duncan also shrugs off Robert Duncan's complaint that AE won't even own the solar array. In 25 years, who the heck will want to own 2009 solar panels?
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