When Austin Energy announced the radically ambitious solar-power goals in its new strategic plan — adopted two weeks ago by the City Council — did the utility have its fingers crossed behind its back? Not really, but those sky-high solar standards do come with an asterisk, one that may end up being quite large.
Leaders both at AE and City Hall note that Austin Energy has not committed, as part of its overall embrace of clean energy and conservation, to pay for lots of solar power — 15 megawatts a year by 2007 and 100 megawatts a year by 2020 — regardless of the price. Rather, the AE strategic plan conditions those investments on a yet-to-be-determined solar price, to emerge from a planned “comprehensive value” study first proposed by the city Resource Management Commission and added (like the solar goals) to the AE plan two days before the City Council adopted it.
That price is designed to be higher than Austin Energy would willingly pay just for the electricity, but will nonetheless be far lower than solar-power costs right now. When first conceived by solar advocates and refined and endorsed by the RMC, the comprehensive-value study was primarily a tool to accomplish the former aim. As adopted by AE and the City Council, it has also become a tool to accomplish the latter.
The RMC’s resolution, presented in mid-November, asks AE to incorporate into such a study “a comprehensive accounting” of, among other things, the economic benefit of developing a solar industry in Austin, or of saving the cost of fuel, transmission, and distribution for the power that would be replaced by solar electricity (for which those costs would effectively be zero). The RMC also suggested AE put a value on “price predictability and hedge against fuel price increases” — the same benefits now being enjoyed by Green Choice wind-power customers — as well as on the “security and reliability” of solar’s being a, well, eternal power source. And AE was asked to put dollars to solar’s “time of use value” — the fact that the most productive time to generate solar power, hot summer afternoons, is also the time when AE demand is at its peak. (The opposite is often true of wind power — the turbines are spinning most fiercely in West Texas in the middle of the night, when Austin customers don’t need the electricity.)
The last such analysis was done in 1994, finding that solar electricity was worth up to $2 a watt to Austin Energy. (The electricity itself is worth less than $1.) “Right now, that’s substantially less than the market price of solar, and I expect that it will be in the future as well,” says AE Vice-President Roger Duncan. “But it’s a target the industry can shoot for.” Even if, as anticipated, the comprehensive-value study finds solar is now worth more than $2 a watt, it’s probably worth much less than the $7 to $10/watt it costs to produce now.
So, if the study comes up with a figure of, say, $3 a watt, and if by 2007 the industry has brought the cost of solar down to, say, $6 a watt — both realistic assumptions — then Austin Energy has really only committed to a solar goal that’s half as ambitious as it sounds right now. Hence the study will perform the neat trick of both boosting and limiting the price of solar energy at the same time. “It also fits better within our public purpose,” says Duncan. “If the city’s going to buy a piece of land, we have to get an appraisal, and the council can’t pay more than appraised value. We’re not in the same legal situation, but the principle is the same. We shouldn’t be paying for more than the true appraised value of solar.”
Which places the ball back in the court of the local solar industry and its advocates, who frankly don’t know what the market price of solar energy will be five, or 15, years hence. But clean-energy advocates’ stated aim was to use Austin Energy to create a market for solar, and even goals half as ambitious as those in the AE plan could go far to achieve that end. So will the solar-rebate program included in the plan, which Duncan says is the utility’s first priority on the solar front.
That program will offer customers rebates of $5 a watt for their solar installations — the highest offered by any utility in the country, and even more if the photovoltaic cells are manufactured locally. (This last provision has emerged from its former legal limbo.) The rebate program should be ready for City Council adoption this spring, while the comprehensive-value study — which should take about a year to complete — wouldn’t be needed by AE until 2007.
This article appears in December 19 • 2003.