Austin approves city utility’s climate plan including natural gas ‘peaker’ plant

December 26, 2024

The city-owned utility in Austin has a plan to cut planet-warming emissions while maintaining reliable service. Austin Energy’s Resource, Generation and Climate Protection Plan is a roadmap for how the city will generate its electricity in the coming decade as it works to become 100% carbon free by 2035. The plan garnered controversy for opening the door to a new natural gas power plant, but it received city council approval following the addition of environmental safeguards and targets for building battery storage. 

The plan, which is an update on a previous version approved four years ago, outlines four major strategies to transform Austin’s power supply: prioritizing customer energy solutions, developing local power resources, advancing decarbonization efforts and fostering technological innovation. 

“The 2035 plan builds a bridge to our renewable energy future while promoting reliability, sustainability and affordability,” said Austin Energy Chief Operating Officer Lisa Martin, during a city council meeting. 

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Austin Energy serves 575,000 customers across 437 square miles. Like many utility companies, it is attempting to balance competing interests while keeping the lights on. The city wants to reduce its carbon footprint, but it also needs to account for population growth and new businesses that are hungry for electricity. All the while, the company is hoping to prevent more rate increases after the cost of electricity in Austin has been going up in recent years.  

At the heart of the plan is a push to reduce peak energy demand through expanded energy efficiency and demand response programs that compensate customers for reducing power consumption at critical times. Austin Energy aims to achieve 975 megawatts of energy savings by 2027 and reach 270 megawatts of demand response capability by 2035. These programs will include new initiatives like managed electric vehicle charging and customer-sited battery storage incentives. 

The plan also addresses critical local power supply needs following the retirement of 725 megawatts of natural gas generation in 2021 and 2022. Those closures led to over $150 million in costs in 2023 from congested transmission lines, as the utility became more dependent on importing power from elsewhere in Texas. 

To maintain reliable local power, the plan allows Austin Energy to pursue construction of new natural gas “peaker” plants that would operate only during highest demand periods, while also requiring significant investment in battery storage. Under amendments added by city council, Austin Energy must build 200 megawatts of local battery storage, expanding to 450 megawatts by 2035. 

The utility will also expand local solar generation to 405 megawatts by 2035, including both rooftop and community solar programs. A new “Solar Standard Offer” program will make it easier for commercial properties to host solar installations for community benefit. 

As part of the plan, Austin Energy is committing to explore emerging technologies including: 

  • Piloting a 5-megawatt geothermal power project in East Texas. 
  • Developing “virtual power plant” programs that coordinate demands on the grid with customer-owned energy resources such as at-home batteries and smart thermostats.  
  • Monitoring emerging technologies like advanced nuclear reactors and carbon capture. 

Some environmental advocates have criticized the potential for new gas facilities, warning that it contradicts the carbon-free goals and suggesting Austin Energy should channel those investments toward more solar and battery storage. 

 “We have to not let ourselves sleepwalk into disaster because it is easy,” Sean Atkins, a policy analyst with New Consensus and member of the climate advocacy group the Sunrise Movement, said during testimony at city hall. “Clean pathways are more reliable and more financially secure.” 

In response to such concerns, several city council members offered amendments to the original plan. The amendments would set caps on how much climate pollution the new peaker plant can emit. They would also raise the goal on how much battery storage the utility needs to build and require Austin Energy to first issue a request for proposals for clean technology that could serve as an alternative before releasing an RFP for a new natural gas plant.  

In addition, the plan still includes key environmental provisions: 

  • Maintaining the goal of 100% carbon-free energy by 2035 
  • Setting an interim target of 70% renewable energy by 2030 
  • Maximizing solar and battery storage on city-owned land 
  • Expanding clean energy access for renters 

“Our utility needs flexibility and a continued culture of innovation,” said Council Member Alison Alter, who was one of the members to initiate the plan update in 2022. “We will not be judged by the plan but by how it is executed.” 

If Austin Energy ultimately moves forward with designs and a site plan for a new peaker plant, city council would still have to give final approval. 


Photo courtesy EranVzl, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons

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