Enlightened Energy Policy in Austin, TX Michael Lama Editor Werner Lang Aurora McClain csd Center for Sustainable Development III-Case Studies 2 3.2 Enlightened Energy Policy in Austin, TX Enlightened Energy Policy In Austin, TX Michael Lama Based on a presentation by Richard Morgan Figure 1: As of January, 2009 Austin Energy will receive 439 MW of electricity annually from turbines located in West Texas Introduction Greater demands call for creative solutions It is an old cliche that “everything is bigger in Texas.” In a land known for its extra-large Austin is the 16th largest city in the United panoramas, with personalities to match, the States, with 690,000 residents, and is energy policy formulated by the City of Austin expected to more than double in population demonstrates that this inclination toward within the next twenty years. Faced with the large gestures does not end when it comes prospect of explosive population growth and to passion for protecting the environment or subsequent increases in demand for energy magnitude of ambition. The energy policy and resources, the city government has developed by the city government and its utility committed itself to fostering energy conserva- companies is regarded by many as one of tion and implementing the use of renewable the most progressive guidelines in the nation. energy sources. Austin Energy is the nation’s What began as a pragmatic endeavor to limit 9th-largest municipally owned electric utility, demands on an overtaxed energy infrastruc- serving 388,000 metered customers and a ture, eventually developed into an ambitious population of more than 900,000 in a service attempt to eliminate the city’s contribution area encompassing some 437 square miles.1 to global warming. Austin has been trying Since the early 1980s, Austin Energy has to reduce its carbon footprint by focusing on implemented a variety of measures to reduce reducing energy demand through a number the city’s carbon emissions. These efforts of strategies. These include implementing have not gone unnoticed; in 1992 Austin was conservation programs, developing the first honored to receive the United Nation’s Local system for rating green buildings, rewriting Government Honours Programme Award the building codes, and fostering close relation- Rio Earth Summit. While the City of Austin ships with the community and local building has gained international recognition for its industries. Working to meet the ambitious conservation programs, the initial motivations Austin Climate Protection Plan, the city is now were political and economic rather than purely exploring ways to progressively modify the altruistic. Mindful of the controversy gener- existing building code and develop a portfolio ated by its involvement with a regional nuclear of renewable energy sources to minimize its power project and hoping to avoid becoming carbon contribution. embroiled in the trying political and regula- tory process of constructing additional energy production facilities, the City sought instead 3 III-Case Studies to cut consumption aggressively, thereby reducing demand on its utilities. The wisdom of this strategy has only been underscored by recent developments. The cost of energy has increased over the past 10 years, at a faster pace than during any prior period in history. As a result, the cost of building new generating plants has continued to rise at an unprecedented pace.1 Opposition to the siting of new power plants, transmission lines, and substations, coupled with permit protests on environmental grounds, have increased per- mitting and construction costs and reinforced the importance of demand side reduction. Energy load analysis Demand for energy fluctuates greatly over the course of a day as well as a season. Energy production companies must configure their power infrastructure to accommodate the needs during the most demanding periods to avoid the risk of potential blackouts or brownouts which could seriously jeopardize the stability of the electrical grid. Minimizing the differential between the highest and low- est demand loads is one of the most efficient ways to reduce the need for additional energy Figure 2: Average energy loads during peak energy demand periods production facilities. Energy demands may be broken into three load types. Base loads repre- sent the minimum amount of electricity a utility or distribution company must make available to meet minimum consumers requirements. In Austin, this consistent daily load averages roughly 1600 MW.2 Intermediate loads are greater than the base and less than the peak but still can be significant, persist for several hours a day, and vary by season. Peak loads represent the few hours a year when electricity demand is the highest. In Austin, summer and winter loads are typically the highest, while fall and spring loads tend to be the lowest. Summer loads peak in the afternoon between 4 PM and 6 PM, while winter loads typically peak between 7 AM and 9 AM. In 2008, record temperatures in Austin helped to set a new peak load record of 2,514 MW.1 Electric utilities typically utilize the lowest-cost resources to meet base load requirements. These resources, such as coal or nuclear, have the capability to operate at a capacity factor, which measures resource utilization, of 90 percent or higher. Utilities use intermedi- ate resources, such as natural gas plants, to meet intermediate load requirements. These resources are generally more expensive to operate: they function with a capacity factor of between 35 and 55 percent. Finally, peak resources are typically fast-responding com- bined cycle natural gas turbine units, which (nuclear) (coal) (natural gas) (natural gas) (mixed) (natural gas) make up the residual demand and operate with a capacity factor of 5-15 percent. While Figure 3: Energy sources utilized by Austin Energy to meet electricity demands. these peak power plants only operate for a 4 3.2 Enlightened Energy Policy in Austin, TX few days or even hours over the course of a pumps. Businesses can receive rebates of up year, the cost to build, finance, maintain, and to $200,000 per site. Small-business energy fuel peak generation capacity represents a efficiency programs include a turn-key light- significant financial liability to the utilities that ing retrofit program in which 200 companies operate them. The high cost of preparing for participate each year. Austin Energy is the only these peak loads places a great economic utility outside California that provides rebates value on demand side management. for data centers, and they began the first refrigerator recycling program in Texas, which Demand side management (DSM) in four years has collected almost 12,000 refrigerators and freezers.1 Since 1982, Austin Austin Energy (AE) was one of the first munici- Energy efficiency programs have reduced the pal utilities in the United States to establish a need for additional generation by more than demand side management program. AE has 800 MW.1 This is almost as large as the city’s now established some of the most comprehen- share in the South Texas Project, a controver- sive and successful energy efficiency, green sial nuclear power plant.1 The company refers building, and load-shifting programs in the to the reduction of peak demand through nation. The first conservation programs, spon- demand side management as its “conservation Figure 5: Solar arrays have been installed by more than 577 Austin sored by the City as part of this campaign, power plant” or “NegaWatt” plant. In addition, Energy residential projects as part of the Green Building Program grew out of a straightforward value proposi- AE energy efficiency programs have cut power tion. Energy efficiency is the lowest-cost new plant emissions significantly: carbon dioxide generation strategy for meeting load growth. (CO2) emissions have been reduced by 70,100 On average, Austin Energy spends about $350 tons, nitrogen oxide (NOX) emissions by 53.7 per kilowatt (kW) of peak demand avoided, an tons, sulfur oxide (SOX) emissions by 48.6 expense far lower than the cost of construct- tons, and carbon monoxide (CO) emissions by ing and operating any type of new generation 37.3 tons annually.1 The utility has been work- facility.1 AE energy efficiency programs provide ing on a goal that would reduce peak demand rebates to residential and business customers by an additional 700 MW by 2020. As long as as well as low interest loans to help residential the cost of implementing demand reduction customers pay for energy efficiency improve- through energy efficiency incentives is less ments. The residential program alone provides than the avoided costs, the City will have a rebates that cover about 20 percent of the strong motivation for encouraging conserva- cost of important energy efficiency improve- tion. However, as building codes have become ments, including additional insulation, duct more stringent with time, and new construction repair, solar screens, installation of a radiant became increasingly efficient, the city’s return barrier in the attic, and even swimming pool on investment for interventions and retrofits to Figure 6: Promoting the use of compact fluorescent lights represents one aspect of Austin Energy’s DSM initiative. Figure 4: Since 1982, Austin Energy efficiency programs have reduced the need for additional generation by more than 800 MW. Figure 7: The Austin Energy residential energy efficiency program helps to monitor building performance. 5 III-Case Studies existing projects has begun to diminish, and AEGB offers technical assistance for local are built green. More than 8,600 single family these initiatives are becoming less attractive. building professionals who have made a homes and 6,000 multifamily units have been commitment to build green. All single family rated during the lifetime of the program.2 In Developing the first green building rating builders are required to attend a green building fiscal year 2008, peak electricity demand was system orientation before rating a project.