Austin Energy's blueprint for its next decade of power resource planning and generation investments—including proposed natural gas units amid the utility's pledged decarbonization—will be finalized Dec. 12.

The big picture

AE's Resource, Generation and Climate Protection Plan to 2035 is a follow-up to the last version of the power strategy that's leading up to 2030. City Council requested a refresh of that plan two years ago, and the process has since included months of review and debate.

For the new 2035 outline, the city-owned power utility gathered input from thousands of its customers, hosted several community workshops, and presented at various city forums this year to develop the proposal that's now up for council approval. The draft plan, which can be viewed here, was recommended by the Electric Utility Commission resident oversight body this month in a 9-1-1 vote.

Public feedback showed community members most value a path forward centered on the utility's reliability, followed by affordability and environmental sustainability. A majority of AE's residential customers surveyed this summer would also accept higher monthly bills to reach Austin's goal of 100% carbon-free power by 2035; it's currently about 70%.

“We are trying to meet Austin’s rising energy needs while also creating an equitable clean energy transition," AE Chief Operating Officer Lisa Martin told Community Impact. "We have to align and match with the community’s values and priorities.”

The details

The 2035 plan calls for new investments to keep up with AE's customer growth and soaring demand, energy technology innovation, legislative updates and changes in the Electric Reliability Council of Texas, or ERCOT, market.

AE currently sees high congestion costs for bringing in power from across the state grid. More local generation would reduce those costs for the utility—and its customers—that totaled about $150 million last year alone, especially during times of highest demand.

Martin also stressed the utility's focus on customer-side programs aimed at efficiency, demand response, and solar and battery adoption to limit the Austin area's overall need for power.

“The best way to address, and reliably and affordably serve the customer, is to not have to serve them at all by not having the demand to begin with," Martin said.

AE is looking to increase its power transmission capacity, while proposed generation updates may include:

• Boosting AE's portfolio of renewable energy sources, such as wind and solar
• Exiting the locally unpopular Fayette Power Project—AE's lone remaining coal plant. Leaving or shuttering Fayette is a long-held civic and community goal Mayor Kirk Watson called "the highest priority," but which is complicated by AE's joint ownership of the plant with the Lower Colorado River Authority.
• Using new sources such as geothermal generation, starting with an innovative 5 megawatt pilot in East Texas
• Exploring other options, such as nuclear generation and increasing utility battery usage

Any additions would be costly, and subject to public review and council approval before finalized. While future rate hikes are likely, Martin also noted the potential for the utility's power supply costs to drop if reliance on outside sources is reduced.

Zooming in

AE's proposed power generation concepts have changed and drawn some criticism through the year. For example, planning for a new hydrogen plant was scrapped based on community feedback and after further review by the utility; Martin said the technology is still evolving and "not a safe bet" for Austin at this point.

A different concept, the addition of new natural gas "peaker" units, has also prompted scrutiny for expanding AE's reliance on a carbon-emitting power source. Peakers are named for their use only during periods of high demand, and are smaller and produce less emissions than larger natural gas facilities.

Many residents have criticized the proposed peakers over their environmental impact. At public meetings they've raised concerns that they'd likely be located in, and bring negative health impacts to, East Austin.

Any new units would be environmentally cleaner than existing ones at the east side's Decker Creek Power Station and Sand Hill Energy Center, according to AE. They'd also be first to be used during peak hours, while the "dirtier" current options would be pushed the end of the line resulting in lower total emissions.

“You’re covering your customer need with your cleanest resources first, your peakers last, but your dirtiest peakers the very last," Martin said of the proposal.

If new peakers are added, Martin said the utility would still aim to move on from them as a long-term power source in the next decade. Their generation capacity could be replaced in the coming years by new local infrastructure or from clean sources elsewhere.

AE's long-anticipated exit from the Fayette coal project has also been a top item of interest for city officials and residents, and would make a significant dent in the utility's emissions.

The Reduce Emissions Affordably for Climate Health, or REACH, program is already meant to discourage the plant's use, and Martin said the utility remains in discussions with the LCRA over its exit from the project. It remains a "dirty insurance policy" that can save AE hundreds of millions of dollars during high-demand emergencies like Winter Storm Uri, she said, but the plant remains the biggest roadblock for Austin's carbon-free goals that the utility is working to address.

"The federal policy may make [closure] a reality for us," she said. "Things are always changing especially with administration changes, but there are some pretty strict [Environmental Protection Agency] rules that would make it look like you’d have to shut it down without incredible investment that we’re not interested in doing by 2032. But we want to shut it down well before that."

The approach

The plan is expected to pass with several edits from council intended to closely track its progress, firm up utility emission goals and expand Austin's power generating capacity.

A group of officials led by council member Ryan Alter proposed amendments calling for AE to reach 93% carbon-free generation by 2030—on the way to 100% by 2035—while prioritizing carbon-free investments and equity planning in areas most impacted by emissions. They're also seeking to prioritize union labor on AE projects and for the utility to assist any employees whose jobs are impacted by the clean energy shift.

Other council requests include new greenhouse gas standards as emission reduction efforts advance, speedy investment in solar and battery storage projects, and consideration of other power options before moving ahead with any new natural gas peakers. Council member Alison Alter also asked for the plan to account for local air quality that's trending out of line with new federal standards, and for AE to develop operational guardrails before rolling out the peakers.

Another detail

In addition to growing demand due to the Austin area's expanding population, the utility is planning for the high power needs of newer technology like electric vehicle charging stations and artificial intelligence data centers.

AE hasn't seen huge AI-related demands so far, but Martin said the utility expects more of the facilities will arrive in Austin and is accounting for them in its forecasting.

"We anticipate it will be coming. And so part of this plan is to make sure that we have the flexibility to say 'yes' and serve all of that load," she said. "If it’s good for the economy, if it’s good for the community of Austin, we want to be able to serve that kind of load."