Published on April 15th, 2015 | by John Farrell8
Can Other Cities Match Georgetown’s Low-Cost Switch To 100% Wind & Sun?
April 15th, 2015 by John Farrell
Originally published at ilsr.org
This is probably not the first place you’ve read about Georgetown, TX, the town of 55,000 that will be getting the equivalent of 100% of its electricity from renewable energy by 2017. But few articles hit upon the two key reasons Georgetown was able to make this move when so many other cities with abundant renewable resources (e.g. Tucson, AZ) are stuck with a majority-coal-fired electricity supply.
If cities had these keys, many could obtain 100% renewable energy at a surprisingly low cost.
Key #1: Local Ownership
Just 1 in 7 Americans gets their electricity from one of about 2,000 municipal utilities, but these locally controlled utilities allow a community to chart its own electric future. It’s the key behind Palo Alto’s surge toward carbon neutral electricity, toward Austin’s 35% renewable by 2020 goal, and Sacramento’s ability to pursue a 90% reduction in greenhouse gas emissions from electricity by 2050.
Unfortunately, this local self-determination isn’t enough, because there are many other municipal utilities with only a pittance of renewable energy on their grid system. And that leads to…
Key #2: No Contracts
The Georgetown municipal utility closed its last power plant in 1945, and has contracted with third parties to provide electricity ever since. With the expiration of its major supply contract in 2012, it was free to sign new contracts. This freedom is what has allowed other utilities like tiny Farmers Electric Cooperative in Iowa to become the number one solar utility in the country.
Georgetown didn’t pursue renewable energy for environmental reasons, but simply because it was the best investment for their customers. The 150 megawatts of solar PV and 145 megawatts of wind power will supply as much as double the town’s annual electricity use, ensuring sufficient supply year round even with fluctuations in sunshine and wind, and allow the town to sell the excess into Texas electricity markets. As attractive as the price—which was lower than the town’s current wholesale electricity costs—the solar and wind contracts have zero volatility because they have zero fuel cost, insulating Georgetown electric customers from rising fossil fuel prices.
Self-Reliance not Self-Sufficiency
It’s worth noting that the solar and wind contracts don’t mean that Georgetown will be completely reliant on the sun and wind. Their grid remains interconnected to the rest of the Texas electricity system, so in periods of zero wind and zero sun, the town can still tap into the ERCOT spot market for power. However, the wind and solar resource tend to balance one another. As the city’s press release notes, “This means that wind power can most often fill power demand when the sun isn’t shining.”
A Low-Cost Copy?
Could other cities follow suit? If they had the two keys that Georgetown did, almost certainly. ILSR’s analysis suggests that path to 100% renewable energy is surprisingly inexpensive.
Our approach was to analyze the path to 100% renewable energy via wind and solar power alone, for the largest municipal electric utility in each state (i.e. cities with Key #1, and hopefully a timeline to obtain Key #2). The following map shows that 15 of the largest city-owned electric companies (mostly in the Midwest) could contract for 100% renewable energy at 7.5¢ per kilowatt-hour (kWh) or less. Another 18 could do so for less than 9¢ per kWh. The final 14 could contract for 100% wind and solar for 10.3¢ per kWh or less. Detailed assumptions and calculations are shown at the bottom of this post.
The map is pretty clear: Georgetown may be the first municipal utility to procure 100% renewable energy (and not just renewable energy credits), but it won’t be the last. As costs continue to fall for renewable energy, many more cities can make the rapid shift to 100% wind and sun.
Photo credit: Jim Nix via Flickr (CC BY-NC-SA 2.0 license)
The cost of solar and solar resource potential was calculated using the National Renewable Energy Laboratory System Advisor Model, with an installed cost of $2.55/Watt, $20 per kilowatt annual maintenance costs, use of both federal accelerated depreciation and 30% tax credit, financing 100% of the system cost at 8% interest on a 10 year loan, a 5% real discount rate over 25 years, and a 2¢ per kWh margin for the developer.
The cost of wind power was calculated by ILSR assuming an installed cost of $1.63/Watt (source), $49 per kilowatt annual maintenance costs, use of federal accelerated depreciation but no tax credits, financing 100% of the system cost at 8% interest on a 10 year loan, a 6% real discount rate over 20 years, and a 1¢ per kWh margin for the developer. The wind resource was based on a weighted average of Wind Action’s 2011-13 capacity factor analysis where available, LBNL’s Wind Technologies Market Report or an ILSR estimate of 20% capacity factor (used for all states in the Southeast with no current wind power installed).
The reported cost on the map is the weighted average price of power, based on the mix of wind and solar resources.
Renewable Energy Mix
Cities (the largest municipal utility in each state) were assumed to get a minimum of sufficient wind and solar capacity to meet their annual peak energy use, from each technology (e.g. a city with a 150 MW peak use would acquire a minimum of 150 MW of solar and 150 MW of wind power). The capacity of the less expensive technology was then doubled to ensure sufficient annual output to meet the city’s energy needs (based on 2013 retail sales data from the Energy Information Administration). In 6 cities, this figure (for solar) had to be increased further to make sure that 100% of annual energy sales could be met with wind and solar energy production.
For example, Rochester, MN, has a peak energy demand of 279 MW and was assumed to purchase 279 MW of solar PV and 558 MW of wind power capacity, producing 367,000 and 1,600,000 megawatt-hours per year, respectively. The cost of purchased solar (9.3¢) was averaged with the cost of purchased wind power (6.6¢) to get a blended cost of 100% wind and sun of 7.1¢ per kWh.