Austin’s biomass power plant idled again during mid-June energy crunch

Investigations

AUSTIN (KXAN) — The City of Austin’s biomass power plant sat idle again, producing no power, during another statewide electricity shortage last week, according to the city’s electric utility Austin Energy.

An Austin Energy spokesperson attributed the dormancy of the power plant — which is in Nacogdoches and runs on wood chips — to energy economics and a problem firing up the plant.

“The utility operates all of our plants most efficiently and when it makes the most economic sense to do so,” according to an Austin Energy statement. “Last week when ERCOT called for conservation, we started the 24 – 48 hour process to start the plant back up. Upon startup, we discovered an issue that needed repair. Once those repairs were made, we were clear to run the plant.”

The biomass plant began producing power June 21, according to a utility spokesperson.

ERCOT, or the Electric Reliability Council of Texas, oversees the state’s electrical grid. On June 14, ERCOT called on Texans to conserve energy. According to energy experts and ERCOT, an unusual number of power plants had gone offline at the same time the state was seeing blistering heat. People were urged to turn up their home thermostats and hold off on using large appliances. The call for conservation lasted through June 18.

Meanwhile, Austin’s biomass plant produced no power. The grid alert last week unnerved many Texans, but it registered as a relatively minor inconvenience compared to the winter storm crisis Texas experienced in February. The Nacogdoches plant was powered off during that event as well.

“Whether it is big like a nuclear reactor or a small one like Nacogdoches, you want them all online.”

Dr. David Tuttle

Dr. David Tuttle, a research associate at the University of Texas Energy Institute, said the plant isn’t a major power producer — pumping out about 105 megawatts or enough energy for roughly 20,000 homes in the summer — but it would have been helpful to have it online during the recent power crunch. Tuttle is also a board member of the Austin Electric Utility Commission, which oversees Austin Energy.

“Every little bit helps,” Tuttle said. “Whether it is big like a nuclear reactor or a small one like Nacogdoches, you want them all online.”

For perspective, ERCOT estimates Texas’ peak energy demand Friday will exceed 71,000 megawatts, according to forecasts available online. You can see Austin Energy’s renewable power generation here.

Bad contract and tough economics

Austin Energy’s contract with the former operator of the Nacogdoches power plant was described as a financial “disaster” in 2016 by one Austin city councilman. Austin was contractually obligated to pay over $50 million a year, regardless of whether the plant produced power, and that payment would escalate over the contract’s 20-year lifespan. City officials opted to cut their losses in April 2019 and buy the facility from its former owner, Southern Company, for roughly $460 million, according to city officials and media reports. Purchasing the plant saved the city roughly $275 million, according to Austin Energy.

Dr. Joshua Rhodes, also a research associate at UT’s Energy Institute, said the Nacogdoches plant has sat idle largely because of the economics of running it.

“Biomass just costs more to make electricity,” Rhodes said. The cost to run the plant is “quite a bit higher than any of our, most of our, gas fleet, our coal fleet, definitely higher than any of our renewables, and our nuclear.”

Austin Energy’s power contract was signed at a time when natural gas was more expensive, and biomass made more economical sense. With the proliferation of fracking and cheaper natural gas, that financial equation changed, Rhodes said.

The power plant does have positive characteristics. It is classified as renewable. It is also “dispatchable,” meaning it can be turned on and off unlike wind and solar, Rhodes said.

In May of 2020, Austin Energy requested the option to mothball the Nacogdoches plant for much of the year and run it only from mid-May to mid-October. ERCOT approved that request, saying the plant would not be required to support transmission during the off-season, according to a market notice.

Then February happened. During the winter storm disaster, power plants failed across Texas, including gas, wind and nuclear. ERCOT called for power to be shut off throughout the state to maintain grid stability. Millions of Texans were plunged into cold and darkness, with temperatures in Austin hitting single digits.

Austin Energy wasn’t able to operate the Nacogdoches plant during the winter storm, but according to emails obtained by KXAN through the Texas Public Information Act, the utility did attempt to fire it up.

“When short term weather forecast’s trended much colder as we got closer to the event, Austin Energy made an effort to bring the unit out of seasonal mothball,” according to a draft statement written Feb. 19 and obtained by KXAN. “The plant was not confident in their ability to perform given the lack of weatherization due to seasonal mothball planning and the forecasted winter conditions that would make fuel deliveries difficult in treacherous conditions. The plant requires multiple deliveries of fuel by truck in order to maintain production. Due to these factors, Austin Energy contacted ERCOT to inform them we would not be able to reliably bring the plant out of seasonal mothball for this extreme weather event.”

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