Austin Energy executive discusses community solar expansion plans

Austin Energy is planning to “substantially” scale its community solar program and leverage incentives offered by the Inflation Reduction Act (IRA) to the fullest extent possible, said Timothy Harvey, Austin Energy Customer Renewable Solutions Manager, in an interview with NPM.

The utility has piloted a community solar program since 2015, which currently serves more than 500 customers. Half of the program is carved out for low-income customers who participate at no cost and the other half is offered to customers at a market rate, where those customers pay a premium rate locked in for 15 years with the ability to hedge, according to Harvey.

Currently, the market-rate participants are saving about 1/10 of a penny due to an increased cost of energy in ERCOT. Low-income participants can lock in a premium at no cost and they’re currently saving 1.6 cents per kilowatt-hour on their bill, according to Harvey.

The program intends to be self-sufficient where it doesn’t require any cost-shifting to non-participants. However, the current portfolio does require a small amount of cost-shifting.

“We’re looking to leverage IRA tax benefits to get lower portfolio costs so that we can maintain the self-sufficiency of the community solar program and thus scale it,” Harvey said.

Their portfolio consists of three projects: a 2.6 MW ground-mount facility at La Loma, a 1.5 MW covered parking array at Austin-Bergstrom International Airport, and a 185-kWh rooftop facility at Palmer Events Center.

For its expansion, Austin Energy is considering a phase-gate approach, where they launch the program by procuring a specific number of megawatts over a certain period of time, then adjust the figure based on the responses received. Whatever they hit first will indicate the stop of the phase, Harvey said. For example, if they hit the MW first, then they stop accepting applications and go back and evaluate the price.

“If that number is too high, then you’re going to get too many applications and problems in your application queues which could lead to a lot of abandoned projects,” Harvey said. “Vice versa, if the value is too low, then you don’t get any applications.”

“If we’re ok with the stream of projects that are coming in then we would re-release that price,” Harvey said. “If they came in way too fast and we see that we can’t handle that many applications at once, then that indicates that the price is too high, and we would reduce the price for the next tranche.”

“If we get to the end of the months and we haven’t hit the targeted number of MW, then that indicates that the price is too low and then we would entertain the idea of increasing that price,” Harvey said, adding that it’s a balancing act to ensure they minimize cost-shifting to non-participating customers.

“But we think that with the IRA benefits that it will give us that little nudge that we need to get those projects in to being cost viable,” Harvey said.

The procurement structure will be a “standard offer”, which means that Austin Energy will identify, in collaboration with stakeholders, project criteria that best leverages IRA incentives and puts a value per dollar per kWh that they are willing to pay for different types of projects.

“So a project with more criteria is likely going to have a higher dollar amount that Austin Energy is willing to pay,” Harvey said. “So, the bigger projects, which achieve economies of scale, are probably going to have a lower value assigned to them. All of this is so we can take any cost-savings that exist and pass them through to low-income customers.

“Part of the beauty of this approach is that you can standardize the contracts, and no back-and-forth negotiation of contracts,” Harvey added. “It would all be standardized, and we would work with the solar contracting community to develop those standard contracts.”

Austin Energy has a low-income customer program called the Customer Assistance Program (CAP), which allows customers enrolled in any of eight federal or state assistance programs to be eligible for. This program is also being expanded and is expected to triple in size, according to Harvey.

CAP recently had around 30,000 customers enrolled, but they’re hoping to help about 90,000 low-income customers with their energy bills.

The Standard Offer projects will be interconnected on the utility’s side of the meter and will allow the utility to pay the system owner for the electricity produced rather than the account holder as in a typical interconnection behind the meter.

“What that does is it opens up a new market sector that is practically untapped,” Harvey said, highlighting commercial real estate partnerships and commercial and industrial projects in the territory.

“We’re excited about that. There’s lot of roof space in that market sector—think strip malls and office buildings,” Harvey said.

Austin Energy is a publicly owned utility providing electrical power to the city of Austin, Texas, and surrounding areas. Their service area covers about 437 square miles mostly within Travis County. Anyone interested in participating in the stakeholder process can email their interest to solar@austinenergy.com.

Harvey expects a formal announcement in the next few months after its concludes its engagement with stakeholders.

*This story was originally published exclusively for NPM subscribers last month.


New Project Media (NPM) is a leading data, intelligence and events company dedicated to providing origination led coverage of the renewable energy market for the development, finance, advisory & corporate community.