Austin Energy Considers Adding Natural Gas Plant to Resource Plan

Possible controversial addition to 2030 climate plan

Austin Energy must take into account an increase in extreme weather events, like the 2021 winter storm (photo by John Anderson)

Austin Energy is considering a controversial addition to its 2030 Resource, Generation, and Climate Protection Plan: a new natural gas plant, to be converted to carbon-free hydrogen generation by 2035.

As part of next year's update to the resource plan, AE provided a briefing to City Council's AE Oversight Committee last week, in which they outlined challenges and potential solutions to meeting the climate and affordability goals set out in the city's Climate Equity Plan and the 2020 Resource Plan. Challenges include retiring AE's share of Fayette coal plant, building resilience to extreme weather, adapting to the state grid's market volatility, and congested transmission line costs amid ever-growing demand. In order to meet those challenges, AE has offered several technology portfolios that include building out local solar capacity and storage capacity (aka batteries), managing demand efficiently, and building more carbon-free generation sources. That last point contains one of AE's more controversial proposals: to build a natural gas plant as a "near-term bridging solution" to meet AE and Council's affordability goals, with the intent to transition it to green hydrogen power by 2035.

Several Council members raised questions about "spending money on new, albeit more efficient ... units that run on fossil fuels. We're still adding capacity that is carbon-emitting," said CM Ryan Alter, adding that "it's so much cheaper to not use electricity than to build new generation." Those concerns are echoed by the Electric Utility Commission's working group, which will provide a recommendation to Council on the plan in January.

“We obviously want the addition of renewable energy, but if it’s just adding renewable energy and also adding fossil fuels, you don’t actually end up with emissions reductions.”  – Public Citizen’s Kaiba White

Public Citizen's Kaiba White, who serves on the group, has myriad concerns over the hydrogen plan, chief among them that "the climate crisis is such that we need to reduce emissions now, not just wait till 2035. This idea of actually adding to the emissions portfolio just totally goes in the wrong direction." Furthermore, she is concerned that AE's modeling overestimates the availability, affordability, and sustainability of hydrogen by 2035.

Currently, there is no hydrogen infrastructure locally; AE would be counting on another entity to produce it. Expensive infrastructure build-out would then be needed to transport the hydrogen to Austin. And there's the sustainability question: Hydrogen production uses electricity, and in order for it to be truly green, that electricity needs to be renewable. Plus, hydrogen is more prone to leakage than methane, which could cut into any emissions benefits it provides. "Right now, only 1-2% of the hydrogen being produced globally is 'green' hydrogen," says White, adding that AE's modeling has been very conservative in predicting the price of solar, batteries, etc., which is why she is skeptical of their "wildly optimistic" modeling for hydrogen. "We obviously want the addition of renewable energy, but if it's just adding renewable energy and also adding fossil fuels, you don't actually end up with emissions reductions."

The EUC working group has put forth two alternative scenarios that are fully clean energy-based, which include ramping up energy efficiency and local solar batteries. AE told Council longer-lasting battery options would cost more but stressed that the hydrogen plant is not the only option for meeting both affordability and sustainability/resilience goals. They urged a combined approach, because portfolios without solar or battery storage overcome extreme weather risk, those with hydrogen capabilities meet affordability goals, and those with local supply overcome congestion risk.

AE will receive the working group's recommendation in January and come to Council for final approval on the update no later than March.

Editor's note Thursday, Dec. 21 11:00am: A previous version of the story incorrectly stated that portfolios with solar or battery storage overcome extreme weather risk; it’s actually only those without. The Chronicle regrets the error.

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Austin Energy, Kaiba White, Public Citizen, Winter Storm Uri, City Council, Ryan Alter

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