Saturday, January 25, 2014

A Win-Wind Deal for Georgetown

Published in the Sun January 25, 2014


If you are interested in renewable energy, something extremely remarkable happened in Georgetown last year.  Our fair city, with no fanfare whatsoever, approved and signed a contract with a wind farm that could provide over 85% of our electricity when it comes on line in 2015.  That much wind power in our portfolio will definitely put us on the top shelf of cities committed to renewable energy.

Georgetown has entered a 20 year agreement with EDF Renewable Energy for half the power produced by Spinning Spur 3, a 194 megawatt wind farm under construction in Oldham County Texas, 50 miles west of Amarillo.  Garland Texas is taking the other half.  (Spinning Spur 1 is partially owned by Google, which has a long-term goal of 100% renewable energy.)  Jim Briggs, general manager of utilities, can’t disclose the exact price we will be paying when the wind farm is completed, but it is very competitive with electricity generated from natural gas.  So competitive in fact, that Mr. Briggs expects he will eventually be able to decrease customer rates for a kilowatt-hour of electricity, lowering our utility bills.

West Texas wind power has recently been selling for historic low prices, as low as $28 per megawatt-hour (2.8 cents per kilowatt-hour) and Georgetown’s cost for wind energy is now locked in for the next 20 years at today’s low price.  In contrast, the price of electricity from natural gas fluctuates every fifteen minutes.  It is cheap when demand is low, but when the weather turns bad and demand skyrockets, like it did during the recent Polar Vortex or like it routinely does on August afternoons, wholesale electricity prices frequently shoot up to $500/megawatt-hour, and in a real pinch can go as high as $5000/megawatt-hour.  It doesn’t take too many hours of the high prices to burn through anything you saved with cheap gas during off hours.

Georgetown will be contracting for so much wind power that during the early morning and late night hours we won’t be able to use it all, and excess power will be sold to ERCOT at a profit.  During the mid afternoon, the wind won’t quite cover all our demand, so that is when we will fulfill our other old contracts for fossil fuel energy.  Of course mid afternoon is a wonderful time for solar generation.  As some of those old energy contracts expire, Mr. Briggs is looking for some competitively priced commercial solar projects to cover that expensive midday gap when cities and businesses scramble for enough electricity to keep the air conditioning on.

Besides not emitting greenhouse gases and not being dependent on a global fuel commodity, wind energy has another great advantage for a hot, dry state.  It does not require water.  Coal fired power plants use hundreds of thousands of acre-feet of water every year for cooling.  Fracking for natural gas also requires large amounts of water to be injected into the wells.  Ironically, Texas may run out of water before we run out of natural gas.

One might well ask how Georgetown became a green energy city so suddenly and without the usual civic angst that might accompany a convention center or a drive-through hamburger stand.  A number of stars aligned to create this “windfall.”  First, Texas has installed a lot of wind turbines, leading the nation in wind energy.  Since wind farms do not have big batteries, when the electricity is generated it has to be sold.  Second, competitive renewable energy zone (CREZ) transmission lines were recently completed and allow electricity from west Texas wind farms to be brought to the population centers such as Dallas, Houston, and Austin.  Third, and most fortuitous for us, the federal production tax credits (PTC) for wind energy were set to expire on December 31, 2013.  To be eligible for the PTC, EDF Renewable Energy had to have contracts for Spinning Spur 3 in place by the end of the year.  In other words, a little breeze blew Georgetown Utilities through a very narrow window of opportunity to purchase clean energy for less than dirty energy would cost.  Thank you, Mr. Briggs and the Georgetown City Council, for not closing the window.

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