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Green pricing issues – how long can a few carry all?

One of my earlier posts discussed how Austin Energy, the #1 US utility in selling renewable electricity, had posted a price for its latest GreenChoice batch of renewable electricity such that it was too high for any more takers. The major issue coming to the fore is that at some point, a small percentage of residential and commercial customers cannot pull along an entire city, much less a state or a country, toward high percentages of renewable energy all by themselves.

In trying to find a way to meet its goals, Austin Energy changed its standard 10-year fixed price (at 9.5 cents/kWh for GreenChoice charge + a standard 3.6 cents/kWh) offer for renewable energy by adding a 5-yr option as well (at 8.0 cents/kWh for GreenChoice charge + a standard 3.6 cents/kWh). Now, after no one is buying the latest batch of green pricing, the charged price has now come under scrutiny by some local experts, saying that in fact Austin Energy is not open enough about how it calculates this price. So in attempting to come to a solution, a task force has been set up to come up with a solution. Additionally, Austin Energy is now proposing charging 5.7 cents/kWh and a 5-yr fixed price for the Green Choice charge.

A local paper covered the issue well, see this Austin Chronicle article. Also see a website, PowerSmack, organized by a local energy consultant to discuss these issues.

Much of the consternation over the price for the green electricity stems from the electric grid transmission charges that are applied to much of the wind power coming from West Texas through a limited set of transmission lines. The state of Texas has a plan in motion to build more transmission lines to relieve this congestion, but the solution is 4-5 years out during the siting and construction of the transmission lines. So, we wait for the transmission lines, but this is not a unique problem, and further expansion of renewable energy in Texas and other locations will face similar issues. Even with the transmission constraint charges, reports are showing that overall electricity prices in Texas are actually lower

But as Austin Energy general manager Roger Duncan states in the Austin Chronicle article and in regard to the GreenChoice program, it was intended to stimulate the market for renewables and not continue forever. The city council of Austin (who officially approves pricing for electricity that Austin Energy) is now coming to grips with the unavoidable fact that to meet goals for low carbon emissions (and we really haven’t even started) and high percentages of renewable electricity, sooner or later everyone must contribute in one form or another. These levels of contribution by poor, middle class, rich, environmentalists, industrialists, greenies, turquoisers, left, right, up, down and everything in between is what the future is all about. The future is being determined on a local level by a small group of people representing just under 1 million citizens in Austin, TX USA, and perhaps on a global level this December in Copenhagen by thousands of world representatives representing almost every country in the world.

About Carey King

Dr. Carey W King performs interdisciplinary research related to how energy systems interact within the economy and environment as well as how our policy and social systems can make decisions and tradeoffs among these often competing factors. The past performance of our energy systems is no guarantee of future returns, yet we must understand the development of past energy systems. Carey’s research goals center on rigorous interpretations of the past to determine the most probable future energy pathways. Carey is a Research Scientist and Assistant Director at the Energy Institute at The University of Texas at Austin, and appointed also at the the Center for International Energy and Environmental Policy within the Jackson School of Geosciences and Business, Government, and Society Department of the McCombs School of Business. Visit his website at: http://careyking.com and follow on Twitter @CareyWKing
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