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Austin, Texas, has an aggressive plan for alternative energy. The “Austin Energy Resource, Generation and Climate Protection Plan to 2025” sets the city’s goal of sourcing 55 percent of its energy from renewables by the end of the plan’s term. However, Khalil Shalabi, Austin Energy’s vice president of energy market operations and resource planning, has advised Austin’s Energy Utility Oversight Committee to slow down any plans to buy more solar power because its cost is falling so dramatically.
“I don’t think anybody, really, in the market … envisioned what’s going on here,” Shalabi said, according to the Austin Monitor. “This is new to a lot of us, that the technology is actually declining at such a rate. I think we’re all very happy about that, especially since our goals are so aggressive for solar.”
In 2008, the utility signed a deal for solar power at $160 per megawatt-hour. In 2014, prices had fallen so dramatically that the utility paid just over $40 per megawatt-hour of solar energy from another project. Shalabi said Austin Energy is seeing prices 20 percent lower from that project, which means a shortfall for the utility that he described as “buyer’s regret.”
According to Austin Energy spokesperson Robert Cullick, Austin Energy contracts for solar power at agreed-upon rates for the length of the contract. With the plummeting cost of solar power, it faces lower relative prices, which the city isn’t able to benefit from because the contracted price remains fixed.
Recently, Austin Energy put out a request for proposals for up to 600 megawatts of solar contracts. Now, even considering the city’s aggressive goals, the utility is recommending that the city only contract for 200 megawatts. Waiting on the other 400 megawatts leaves the option for Austin Energy to develop its own solar projects, which means it could immediately benefit from falling solar prices.
Many factors complicate the issue, such as the potential expiration of the investment tax credit (ITC), a driving force in the lowering prices of solar power. Shalabi said the utility’s projection shows prices in the 2017–2020 period would still be lower, regardless of the expiration of the ITC.
For now, it seems Austin Energy is content to wait for falling solar prices to stabilize, which it expects before 2025.
About The Author
JOHNSON is a writer and editor living outside Washington, D.C. He has worked in magazine, web and journal publishing since 2006, and was formerly the digital editor for ELECTRICAL CONTRACTOR magazine. Learn more at www.tjfreelance.com.
