technology economy

clean energy green choice

 

That is the larger lesson here. Communities that invest in technological progress move ahead and are prepared to capitalize on change... While nearly everyone else clung to old polluting energy sources, Austin invested in clean energy just as we invested in semiconductors, wireless and digital filmmaking.

 

 

 

In the history of energy production, this is a very big deal. 

In the spring of 2006, for what may be the first time since coal sparked the dawn of the Industrial Revolution in the 1700’s, a public utility offered its customers a choice between two electricity sources whose prices were the result of competitive bidding on the open market—one a combination of coal, natural gas and nuclear, the other a clean energy combination of primarily wind and solar—and the lower priced electricity came from…wind and solar.

In March 2006, the competitively bid fuel charge for Austin Energy’s coal/gas/nuclear customers became 3.63 cents per kilowatt hour. At the same time, a new batch of clean energy through the GreenChoice program was raffled off to Austin Energy customers. The competitively bid fuel charge for this batch of wind and solar power was 3.50 cents per kilowatt hour.

Is the financial superiority of clean energy an aberration? Hardly. Instead, it is the culmination of market trends that have been gathering force over the last seven years and which are likely to accelerate.

The financial superiority of clean energy has in fact become so clear in the business world that most of Austin’s major employers have quietly signed on to the GreenChoice program. AISD, AMD, IBM, Samsung, Sematech, 3M, Tokyo Electron and Whole Foods are all Green Choice subscribers. Even Dirty’s has gone clean. Round Rock ISD signed up for GreenChoice after it calculated that the program will save taxpayers $2 million over the next decade compared to coal/gas/nuclear.

To understand how this has happened, it’s necessary first to know how Austin Energy (and virtually all utilities) price electricity.

Your electrical bill is divided into two sections. One section is the base rate. That represents essentially the utility’s overhead—the cost of operating and maintaining utility lines, capital costs from power plants, administrative expenses, etc.

The second section is the fuel charge, and it primarily represents the costs of purchasing coal, uranium and natural gas if you are a coal/gas/nuclear customer, or the cost of electricity from West Texas wind farms, solar panels and landfill methane capture devices if you are a GreenChoice customer.

In 2000, when Austin Energy implemented the City Council’s directive to create a clean energy program, it made a pricing decision that turned out to have important consequences. On the open market, contracts to purchase coal, uranium or natural gas are usually short term, while contracts to purchase wind power typically guarantee a fixed price for 10 years. Austin Energy decided that it would pass on this 10-year fixed rate guarantee to its GreenChoice customers.

Then, just as GreenChoice began to accept subscribers at 10-year fixed rates, the natural gas market experienced a series of dramatic price spikes, including the price increases trigged by the hurricanes in the summer of 2005. Natural gas comprises a third of Austin Energy’s coal/gas/nuclear portfolio (the statewide average is 50 percent).

It is now clear that domestic supplies of natural gas are so depleted, and the cost to import natural gas so prohibitive, that the increases in natural gas prices are likely permanent. And that means conventional coal/gas/nuclear utilities will face volatile fuel costs and long-term price increases—or they can move aggressively into new technologies, just as Austin Energy has.

That is the larger lesson here. Governments and communities that invest in scientific and technological progress move ahead and are prepared to capitalize on change. Governments and communities that timidly cling to old, short-term ways of thinking fall behind and find themselves facing crises instead of opportunities.

While nearly everyone else clung to old polluting energy sources, Austin invested in clean energy technological progress just as we invested in technology, semiconductors, wireless and digital filmmaking. Once again, this investment in technological and scientific progress is paying off. And once again, the people of Austin - who will have better jobs, lower utility bills and cleaner air - are the beneficiaries.

 

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