TREIA’s GridNEXT Conference at the Sheraton Georgetown Hotel and Conference Center will be powered by 100% renewables this year. TREIA didn’t have to take any specific action to make that claim. Unlike other carbon-free conferences, TREIA didn’t have to bring in temporary biomass generators, or contract to buy renewable energy credits to offset power consumption. That’s because the City of Georgetown’s electric supply is now 100% renewable – powered by a combination of the wind and the sun.
In recent years, Georgetown has often been in the news for its commitment to renewable energy, in part because it was the most cost-effective option for the City’s ratepayers. The first deals, three wind contracts for 164 MW of wind across multiple installations were contracted from 2008 to 2013. These contracts are comprised of 20 MW running through 2028, and 144 MW extending through 2035.
Being wind-rich and aided by the seven billion dollar transmission to bring wind from the CREZ in Northwest Texas, most of the long-term renewable PPAs in Texas have traditionally been supported by wind resources. That’s been changing rapidly however, as solar energy is rapidly gaining a foothold in the state. The Solar Energy Industries Association indicates that cumulative installed capacity in Texas at the end of 21017 was nearly 2,000 megawatts, with over 6,400 MW of additional capacity expected in the next five years.
As Manager of Resource Planning and Integration for the City of Georgetown, TREIA board member Chris Foster was instrumental in getting the wind deal done for Georgetown, and he was also the driving force behind Georgetown’s recent addition of 150 MW of solar to the portfolio, extending out through 2043.
In a recent conversation, we spoke about the original wind deal, the rationale behind the move to add solar, and what’s next on the agenda.
Why add solar to the mix?
Foster indicated that a wholesale solar contract made sense because the wind farm under contract – even though it’s at a 56% capacity factor - delivers more power in the later and earlier hours of the day, with more energy delivered during the shoulder months of the year. As a consequence, if one were to compare the total load shape of all of the utility customers with the wind delivered, there was a big hole during the middle of the day during the warmer months. Solar thus fit that spot quite nicely. Foster noted that “the combined wind shape and solar shape matches our load almost exactly, so I am buying what I am selling to my customers.”
He covers any remaining shortfall or surplus mismatch on the ERCOT spot market – mostly with Day-Ahead purchases.
Foster commented that from a hedging perspective, he looked at both solar energy and gas-fired contracts, with both coming in at nearly the exact same price. What swung the needle towards solar was one simple fact: solar developer NRG could offer a 25 year flat price. Gas generators, by contrast, have fuel to pay for and simply cannot take that risk. Foster noted that the City Council includes in its business plan a commitment to stay with flat rates for as many years into the future as is feasible, for budgeting purposes. The only additional complication involves paying for transmission and associated costs such as congestion.
So how has this combination worked out in the recent scorching heat wave? The heat wasn’t enough to drive our load above the production we had. The reason we picked that particular wind farm was that when high pressure sits in Texas, the panhandle is typically generating energy. We had 180 MW coming in versus 150 MW of load…I had a surplus when prices went to $2,000.”
Foster comments that to do this right it takes a good deal of time, especially when multiple parties are involved. The wind contracts negotiated in 2013, for example, took about a year to negotiate not because it was particularly contentious, but because three different municipalities were involved with one developer, so the approval process required coordination of contract terms among three parties.
The 150 MW solar contract for the Buckthorn project (approximately 13 miles from the Fort Stockton airport) was bid out in the middle of 2104, with the deal completed in February of 2015.
More renowned outside the city than at home
Foster comments that the city’s achievement has achieved a good deal of press and attention from multiple U.S. utilities as close as New Braunfels, College Station, and tiny Mason (2,000 inhabitants), whose representatives visited in July are evaluating financial structures related to a 1 MW solar contract.
Utility officials from both coasts have inquired about the purchases, as have delegates from countries such as the Cayman Islands, France, Germany, Israel, and Malaysia, with a Chinese delegation scheduled to arrive in the near future. This keeps Foster plenty busy, and he comments that, “over the last couple of years, I’ve spent as much time with PR as in doing algorithms with settlements for ERCOT.”
Foster notes that while he’s happy to help other government entities better understand the renewable energy contracting process, it’s also vital to educate the local inhabitants. He indicates that when Georgetown announced its first wind deals,
“We went to town hall and had public meetings an explained what we were doing. When you talk to people, they get it and understand what’s going on. But we are also growing extremely quickly. 40% of people here now were not there when we announced in 2012. So we have to make a news story every year.” to remind people. The university continually promotes it and some businesses remind people.”
Although 100% of Georgetown’s energy needs are covered for years, capacity will soon become an issue
Foster asserts that from an annual energy perspective, the contracts will cover Georgetown through about 2030. Which means that the City will need to start planning by 2025 to cover its next tranche of power to meet future energy growth. But Foster points out that the peak usage will only be covered through the next few years, and the City must plan accordingly.
Knowing that, and wanting to maintain a financial hedge, Foster has contemplated short-term contracts to address peak, doing something on the Day-Ahead market, or something else ‘out of the box’ such as installing distributed energy resources with batteries and local solar installations now that costs have come down significantly in recent years.
The concept of building a physical hedge with distributed resources and developing microgrid capabilities
The City is too small to own even a modest power plant and take on debt without affecting the books. Besides, the problem is generally one relating to capacity, rather than energy. So Foster has been investigating a novel way to address the problem: distributing utility-grade (30-50kW) batteries throughout the city in front of the meter, and sized to address needs of four to eight houses.
Unlike other utilities that have put batteries behind the residential meter, Foster asserts that there is an economy of scale that dictates in favor of a plan to go with larger batteries located next to a cluster of houses served by a transformer. In this way, “four or six houses could all become part of a microgrid,” he says. These would be combined with distributed solar on commercial rooftops to create a “physical hedge.” To test the idea his team ran focus groups last summer to determine whether customers would let the utility use their rooftops for distributed solar, and the utility will present its findings to the public in mid-August. It’s a novel concept, and worth watching as Georgetown moves forward.
If Foster and team continue addressing their energy needs creatively, with the buy-in of the community, there’s a very good chance those inquiries and delegations from across the planet will keep beating path to their doorstep in the years to come.