Austin Energy still says hydrogen power plant may be the answer to grid growing pains

Thursday, November 7, 2024 by Kali Bramble

As its end-of-year deadline approaches, Austin Energy is busy crunching numbers, hoping to finally nail down a much-anticipated update to its Resource, Generation and Climate Protection Plan.

Utility staffers have spent the past month in and out of Electric Utility Commission meetings sharing modeling data on dozens of scenarios for the updated plan, which will map out the next decade of infrastructural build-outs to meet the growing demands of Austin's electric grid. A new hydrogen-capable combined cycle gas plant, expanded transmission infrastructure, and an ambitious scaling of local solar generation and battery storage capacity are all on the table as staff weigh the costs and benefits of each hypothetical route.

The update is behind schedule thanks to surrounding Austin Energy's initial proposal, which relied heavily on a new power plant that would run on natural gas before transitioning to a more climate-friendly, hydrogen-based fuel source sometime in the next four to five years. Environmental watchdogs like Sierra Club, Public Citizen and Third Act Texas have all been critical of the approach, calling for a more dogmatic commitment to reversing course on greenhouse gas emissions.

The utility argues the plant could be a critical source of local, dispatchable power as it manages a long-term transition to cleaner energy sources, particularly as unprecedented stresses are put on the power grid because of worsening transmission congestion, more extreme weather events, expanding artificial intelligence and data center industries, plus electrification of the vehicle sector. Staff members assert the utility remains committed to retiring all coal and natural gas assets by 2035.

At the Electric Utility Commission's urging, Austin Energy is continuing to consider more aggressive pivots away from natural gas, including among its modeling a number of scenarios that would beef up local solar generation and battery storage capacity in lieu of gas-burning power plants. Still, data appears to support the utility's claims, with combined cycle plant scenarios showing significantly better reliability and affordability outcomes.

AE staff members say the disparity is due in part to the projected cost of battery tolling agreements, in which the utility would pay a monthly fee to a third-party owner to operate leased battery assets. While the Electric Utility Commission argued upfront investments in battery ownership could circumvent these costs, AE claims its constraints as a municipally owned utility could make such investments unfeasible.

Commissioners point out that the utility's confidence in hydrogen as a financially viable approach seems out of step with their hesitation toward batteries, particularly because the technology has yet to be dispatched in practice. Still, Michael Enger, vice president of energy market operations and resource planning, maintains that a breakthrough in the hydrogen industry is all but inevitable.

"All I can tell you is that I have developers lined up waiting to invest in hydrogen ," Enger said. "There are a lot of incentives out there at the federal level, and a lot of investors are looking to leverage those incentives. ... So while we don't see a whole lot about it today, there is definitely a lot of money on the sidelines looking to produce if they have the demand, and a contract in place to sell it."

AE staff and EUC members will continue poring over the data in coming months, with hopes to bring the matter to Council for a vote on Dec. 12. In the meantime, anyone interested can review the modeling outcomes for themselves

Photo made available through a Creative Commons license .