The Utility of the Future? Austin Energy's Strategic Plan

November 10 2008 / by joelg
Category: Economics   Year: 2008   Rating: 3

By Joel Greenberg


Austin Energy, the electricity company owned by the city of Austin, TX, , is asking for public input into their strategic planning process for power generation through 2020. The question they’re trying to answer is, “What should be the right mix of technologies for generating electricity? How much of energy over the next 10-12 years should come from coal, nuclear, natural gas, solar, wind, biomass, etc.?”

Austin City Council has given Austin Energy two goals: - 30% renewables by 2020, including 100 MW of solar. - Lower carbon emissions—all NEW power generation should be carbon-neutral, however, City Council provided no other goals for lowering green house gas emissions.

Austin Energy estimates that the city will be short by 627 MW in 2020 if current growth trends continue. The gap can be reduced to 238 MW if conversation efforts are stepped up. Either way, Austin Energy will need to be generating more electricity in 10 years, but how?


Austin’s struggle is the same as every other region in the country—find the optimal mix of electrical power generation technologies balancing future demand, current capacity, price, and negative effects on the environment. They’re doing it publicly with a publicly owned utility; their level of transparency could provide useful lessons for other municipalities and the nation as a whole. It’s conceivable some ideas and solutions could find their way into President-Elect Obama’s future energy plans.


This public discussion in Austin could help shape how we talk about energy around the country..

Electricity companies talk in terms about “Base Load” and “Peak Load.” Base Load is the minimum amount of electricity they need to supply that’s “always on” throughout the year. Base load electricity is created by nuclear, coal, and sometimes natural gas powered plants. (Austin Energy doesn’t have significant hydro power.)

Peak Load is the incremental, increased demand. Energy utilities generally build capacity for peak load, even though that capacity is only called into service for relatively short periods of time. Why? So the lights always go on when the switch is flicked, no matter what else is happening on the grid.

For example, Austin generally reaches a peak load for 50 hours in the hottest summer days when air conditioners are running full blast. Because no one wants to be without electricity, utilities plan for these worse case demands and generally have an extra power plant running, ready to get spun up when the demand hits. Look for a discussion of utility level solutions that solve the problem of having an extra power plant running in reserve “just in case,” if any exist now or will exist in within 10 years.

Look for discussions highlighting how inflexible some power sources are and how brittle the dumb grid can be. For example, neither a nuclear power plant, nor a coal power plant can be turned on quickly to meet demand. That’s why nuclear and coal are “base load” power plants. Natural gas is more flexible as natural gas turbines are in reality modified jet engines. They can be powered up within an hour.

However, renewables are even more intermittent. Wind can stop blowing, and the sun goes down every day. The whole systems needs to be smarter in order to accommodate this ebb and flow of electrical generation. However, the dumb grid was designed to handle base loads, not trade off between energy sources throughout the day. As an example, see Loss of Wind Causes Texas power grid emergency.

Look for other realities of electric power generation to be highlighted. For example, there’s currently no utility level way to store energy, except by pumping water into a reservoir at night when electricity is cheapest, or by pumping compressed air into underground caverns. Because there’s no utility level storage of energy, the grid must always be generating electricity to meet current demand, a surprising factoid to those new to the energy discussion.

Look for a discussion of the very real problem of transmission from where electricity is produced to where it’s needed. Currently, West Texas is generating more electricity via wind than can be transmitted through existing transmission wires. Unfortunately Austin’s relatively poor in wind, so without a distribution (or storage & transportation) solution, renewable resources will reach a limit. Maybe one solution is to work with the feds and the state to string wires along highway rights of way. However, challenging assumptions could lead to different solutions, like using wind to create ammonia and then transporting ammonia to where it’s needed to be used by ammonia powered fuel cells. (See an overview, here.)

Energy companies live and die by numbers, a fact that can be used to determine how seriously a company is exploring alternative energy, or innovative methods. For example, asking an energy company executive if they’ve been evaluating algae as means for lowering C02 could bring two kinds of responses: 1) “We’re keeping tabs on it” means they haven’t seen any kind of results that are meaningful and therefore, have no plans to incorporate algae in the near future, or 2) “We’ve followed algae and find that it can only lower our carbon emmissions by X% for $Y/KW.” The second answer shows a real evaluation, the first, a passing knowledge of the issues, with little in-depth analysis.

However, assumptions can be challenged. For example, newer coal plants generally spew 30% less greenhouse gases than their older counterparts, so replacing old coal plants with new is one strategy to lower emissions. Asking the utility if they’ve compared the cost of retrofitting an older plant with algae scrubbers versus building a new plant could challenge the assumption that new plants are needed. Look for citizens asking about the cost of “clean coal” technologies.

Look for the political dimensions of this discussion to come to the fore. Energy companies may appear siloed because they’re concentrating on the factors they can control. However, there are factors beyond their control that a more regional/state/national view can help solve. For example, one solution that was brought up in the recent Austin Energy public meeting was electricity produced by ocean waves in tidal regions near beaches. Austin is 160 miles from the Gulf of Mexico. In answering the question about tidal, The Austin Energy representatives said they wouldn’t even know where to begin to find out who to negotiate with to get permission to put one of those power plants off shore. Clearly, that particular solution takes a political solution that’s larger than Austin Energy. As one example of thinking systemically and regionally, the solution could entail placing the tidal generation plant offshore of Matagorda, TX, which is near the South Texas Project nuclear power plant that’s 16% owned by Austin Energy. This way, the tidal power plant could utilize the 140 miles of transmission lines that already exist. The total solution takes regional cooperation, which makes it a political solution and not just an engineering one.

Also look for the interplay between engineers and executives in the energy industry as they are challenged by 1) green residents that want lower C02 emissions (Austin Energy will commit to lowering emissions to 2005 levels, while the Kyoto treaty’s goal is below 1990 levels), 2) renewable energy advocates that will challenge what they feel are conservative steps in utilizing renewable energy, and 3) concerned citizens coming out of technologically innovative fields like software engineering and IT as they come to terms with slower innovation and higher technical barriers to entry in the field of electrical generation. For example, a typical software entrepreneur is surprised to learn that no utility level battery mechanism exists to store electricity, even though George Westinghouse built the first long range AC power network from Niagra Falls, to Buffalo, NY in the 1890s.

Look for the more entrepreneurial citizens to push Austin Energy to be more experimental and trying more, small scale renewable energy projects as part of the evaluation process. Also look for them to push Austin Energy to think of more inventive ways to deal with carbon. For example, two industries use carbon as an input 1) the nascent algae biofuel industry, and 2) the carbon fiber industry. With a worldwide shortage of carbon fiber due to military and aerospace use, finding a way to capture carbon in a way that makes it a feedstock for carbon fiber production could transform a waste product into a money making resource (this idea is purely speculative).

Look for the stress fractures in carbon credit, which Austin Energy plans to purchase as a means for offsetting some of its carbon. When asked by an audience member how carbon credits worked, an Austin Energy executive explained, “The money is used for projects that will offset carbon, like planting trees in Amazon.” Trees are carbon “sinks” because they breathe in C02 and release oxygen, thereby taking carbon out of the atmosphere. But the City of Austin already plants trees on a regular basis. Neither Austin Energy, nor the City of Austin, can currently get carbon credits for these trees. Why spend more money for carbon credits for trees that are planted on another continent, when trees are currently being planted in Austin Energy’s service area?

Also, Austin Energy has been at the forefront in convincing auto manufactures to create Plug-in Hybrid Electric vehicles, so they anticipate many to be purchased in Austin when they start becoming available in 2010. Again, Austin Energy cannot currently obtain carbon credits for these vehicles being on the road, even though they will reduce carbon emissions in a meaningful way. Finding a solution to these “lost carbon credits” could bring significant benefit to Austin Energy. Because the utility is owned by the City of Austin, the link between the city’s actions and Austin Energy is stronger than if the city was supplied by private energy companies.

Watch closely the distinction between strategic planning and futures planning. It’s clear from their charts and numbers that Austin Energy is participating in strategic planning, which takes existing trends and extrapolates them into sometime into the future, in this case, roughly 10 years. They are saying, “given the current level of growth/cost/efficiency/etc., we see this level of demand in 10 years. This mix will meet that demand.” However, a futurist would start by questioning the assumption that the future will be like the present, only more so. Most likely, they would start by pointing out that applying that “future is like the past” logic to the economy gets us into the current mess we find ourselves. Futurist thinking would question assumptions and develop different models based upon different criteria.

If everything’s on the table, look for a discussion of how Austin could divest itself of 16% ownership of a nuclear power plant and still meet base loads while lowering C02 emissions. While the reality may be that divestiture is not possible, watch the arguments coming down to, “Do you want to die from a POSSIBLE catastrophic nuclear accident, or do you want to die from a CERTAIN degradation of the environment and global warming?”


Website devoted to AE’s strategic planning effort

Public Q&A

Resource Guide that outlines the issues

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