Foster: It was very shocking around the world to have a city in the middle of the fracking boom in Texas, and say, “No, we’re just going to go all-renewable power.” We didn’t do it for a political statement. We knew in 2008, our old contracts were going to end by 2016. We knew we had to transition to something new. We were in a very unique position as a utility where once those contracts ended, we actually lost the rights to every power plant. Which is different than Austin. Austin owns power plants that are paid off, and so when they run those, it’s cheaper just to keep them–we didn’t have that.
So we bid everything brand new, and those bids came back very cheap for renewable power. The long-term stability is good for the community, and we also have industries here that have very long lead times when they bid out products, so for them, they don’t have to have the cheapest electric rate but they have to know exactly what it is to get the cheapest bids, right? So it’s very important for business communities, since those two interests wind up exactly, it matched the renewal portfolio and made it easy to bring it in economically, and it was only after all that work was done that we went back and said, “Are we going to tell anybody that we have all renewable power and we don’t have fossil fuels anymore?” And we thought about that for a while which is why the announcement wasn’t made until two years ago. And we were just thinking, “Should we tell anybody? Does it matter? Are people going to care?” And so when we told council and we asked, the council said, “You know what? People probably won’t care but at the very minimum, our economic development is definitely thinking, if they have that as a pitch, maybe we can help bring in some other businesses,” and so they said, “Let’s just say it and see what happens.” And then, it just exploded.
Dixon: So, looking at the adoption of solar, in the last 10 to 15 years in Texas and in the US, it was very much driven by an environmental movement, and now it’s much more of a financial investment. We’ve seen this change as that price point has come way down, and when you guys were looking at solar, you were kind of on the front end of that —what year did you get started? 2014?
Foster: Yes. 2014. And that time, ERCOT had 148 megawatts of solar utility scale for the entire state, which is a blip. Our bid was for 150MW, and ERCOT didn’t have a great plan for solar at the time and weren’t sure how it was going to integrate but that was the signal to them that said, more of this is going to come, and what’s happened since then is prices have continued to crash at utility scale. Now ERCOT’s got up to 20,000 megawatts of solar. They’re looking at, they have to potentially plan for that over the next five to ten years. And that’s a big game changer for so many like ERCOT which is why they’re working on other kind of rules around demand response and how to integrate batteries.
Batteries have actually a very unique advantage that because of that, they are considered both a load and a resource, so when you’re moving energy, you have zero congestion charges because you don’t have to go from the resource through the hub, to the load zone, financially. It’s all considered the same spot. ERCOT is looking at all those things and the implications for other types of generation and they have realized the advantage of having those resources on the market. I don’t know when battery is going to make sense for homes, but for the utility, it’s actually financially there now. There’s places I can drop them on the grid today that have an instant return.
Dixon: A lot of the feasibility of a battery at a home depends on what kind of rate structure you’re dealing with. If your utility rate plan offers no advantage to move a load around from night to day, there’s really no value to having a battery, assuming they’re giving you value back for the electricity that you export back for the grid. While there may not be value in one jurisdiction, there might be a lot of value in another. So in places like Hawaii and California, there’s places where because of the rules and rates, there is a value proposition for batteries.
Foster: Yes, this is the truth. So on our grid, we don’t have time of use rates in the Georgetown area. But we do net meter and true up at the end of the year —so there is a good incentive for people who use solar up here. However, there is no incentive for battery.
Dixon: So I wanted just to take you back to 2014 when you guys were presenting this proposition to council. What kind of push back or acceptance there was among council members and among the general public? These large renewable contracts were a big deal.
Foster: There was a lot of support, beginning in 2008. We had both the council and the utility board. They didn’t come out and specifically say, “We want renewables over everything else.” What they said was, “We’re okay if you get to at least 30% renewables because we need this as a product for businesses, but what we really want you to do is, find long-term power at a reasonable cost.” It doesn’t have to be the cheapest in the market, but we just wanted to be relatively competitive, and find something that mitigates our exposure to regulatory risk, as everybody’s worried about what the EPA is doing. With the conservative stereotype you get out here, you would think they wouldn’t naturally be on board with renewables, but they were far more concerned about over regulation than they were about what kind of power we have.
When we brought back all the bids and said, “Okay, these are all your different power types. These are the advantages and disadvantages to them.” We had bids from coal, gas, and solar, and wind. When I looked at, in particular, the wind bids, we did our own calculations on the production, verified numbers, made sure the economics were there, and we picked the stuff that had the best economics. We also looked at the risk profile of each bid. There’s a value in renewables and that they don’t tie up water rights, and as we grow and we hit 250,000 people, we’re going to need more water rights, so you have power that doesn’t need water.
When council read details of the contracts they said, “You know what? They are the cheapest deals and they make the best sense for us a city, so we’re going to take those,” and they were all on board, nobody objected to it. Nobody sat there and went, “Oh, these are renewable deals, we should back away from them on principle.” So it was really fantastic conversation.
After we made the announcement, and said, “Hey, you’re 100% renewable,” there were a handful of people that came out and their primary fear was actually that if there was cloud cover and no wind, the city would go dark, and so we had some communication campaign to let people know that that’s not how ERCOT grid operates. It’s a balancing act of power. So the power doesn’t shut off just because the weather changes, and so once people got comfortable with that, all the opposition went away. We’ve had thousands of people calling us and saying, “You guys are doing a great job, we’re proud of you. We didn’t know you were working on that.” So it’s been very, very overwhelming, supportive community, and really, from around the world.
Dixon: So really, I’m curious. I think this is a question you probably would get from people is what happens if all three power plants are not operating? Do you then have to buy energy in the spot market? Additionally, how much energy did you model you would have to buy in the market? How does that reconcile with the reality?
Foster: Yeah, no, no, it’s worked out really well. So the farm in the Panhandle produces about 600,000 megawatt hours a year. The one in the West Texas is about 50,000 megawatt hours a year, and the solar farm is going to be about 420,000. As a city, last year, we only consumed about 610,000. This year, we’re actually going to be on pace for 670,000. But we’ll have enough power out of the units on an annual basis to give us 100% renewable power.
But most of my days are actually spent developing plans to hedge around the financials and I probably spent half the time manipulating the grid supply and the other half the time, just taking straight power. Financially speaking, yeah, we’re market every day. But that was expected.
Dixon: Okay, interesting. One thing that’s also fascinating about this is that you say that you were not sure if to or how to market Georgetown as a 100% renewable utility. I’m sure it’s probably a surprise to you just how much attention that you got being the first in Texas.
Foster: Yeah, I was one of the many people that said, “Nobody will probably even notice.”
Dixon: And how did that work out?
Foster: When we look back on this 100 years from now, people will remember that we were the first to go 100% renewable. That will be our legacy, but if you try to add on the advertising value that’s come from making the announcement, it’s immeasurable at this point. I had family members in New Zealand that heard about it before my mother did. There’s been hundreds of millions of views of this story across various media. I’ve had reporters come to here, everywhere from Germany and France, like you would typically think, all the way to Indonesia, Kazakhstan, Brazil, Argentina, China have sent people up here. There’s been a lot of news from a lot of different areas. So yeah, very amazing response, certainly not something I thought I would be involved in.
Dixon: There’s a lot of businesses right now that have sustainability mandates. They are looking to locate places where they can get renewable energy very easily. I’m curious if you see any kind of effect from that?
Foster: Oh, yes. Absolutely, so we have a site that can handle 100-megawatt data center powered and ready to go, and our team has been trying to pitch that at the state level because the state gets involved in trying to win data centers from big companies like Google, Facebook, and Amazon. So when those companies are out there trying to site, we’re on that list. Before we talked about renewable energy, nobody ever talked to us, nobody. Since we made the announcement, every year, there’s at least two or three of them that come through and say, “We want to talk about your site.” And we haven’t sold it yet but the first question right now as always, can you give us 100% renewable day one? We tell them, “Absolutely.”
We have Scott White Hospital and Walmart, in particular, they both as companies have renewable goals for the whole company, so when went 100% renewable, they said, “Hey, look, since those guys are 100%, you can average our stores together and it increases the overall portfolio.” They advertise with that. We have a local brewery called that decided they were going to get rid of their gas burners and do all electric burners so that they could market their beer as 100% renewable power, and that has worked for them.
Dixon: It’s becoming a real important consideration for people and businesses alike, and its a huge boon for Georgetown. That’s fantastic.
Rosenberg: Do you think that, other cities in the country, like Austin, will ever approach 100% renewables or are the dynamics different?
Foster: Yeah, so the dynamics are a little different for each city because they are in different positions with respect to assets they already own. It was easy for us to move there because we had no prior assets. Austin Energy is increasing their renewable energy targets every year. They have asked us, “What does it take to go from 70 to 100%, and is that financially viable?” I told them, “You’re a larger utility than we are. It takes a little bit of work, but if you wanted to get there, we can help you get there.” And what it really takes is for a lot of these places is, you just have to show them how to sell that energy and they go, “Okay, now, I understand we can get there, let’s integrate.” But if every utility in the state started going that way, then we would run into these issue like Germany had where once you get a certain amount of it, you have voltage problems and so we have to start doing more batteries to accommodate it.
Rosenberg: Battery storage seems to be the number one topic of conversation whenever this stuff comes up about scaling.
Foster: Depending on where you’re at. It’s going to go faster in some areas. So people like us that are working on plans now on how to adapt for it will get there first. We are intentionally building our distribution grid. We have a 60% loading factor instead of 90% like you would normally expect. The reason for that is to allow for energy to be distributed at homes and businesses and travel back and forth across the grid, so that in our own integrated resource plan, what that will do for us and in five years is, it will allow us to spread, distribute solar first and then come through and measure where the losses and the voltage problems are and start strategically dropping in storage to help. I just need short-term batteries. We’re already redesigning the grid to meet new technologies, and eventually, what will happen is, you might have a line built in one neighborhood and it will blink in your house and you will go, “Gee, I wonder what happened with the power,” and what you won’t know is, the line went down but the neighborhood right next to you picked you up. That’s the way we’re designing the grid now. We may be actually able to isolate homes individually, fix everything around them, and bring them up and people will never know they’re out.
Dixon: You mentioned a little bit about distributed solar, I wonder if we could talk about that for just a few minutes. So you’d have to fill me in on some details but I believe maybe last year, you guys were working on kind of a mapping exercise of the rooftop solar resources in Georgetown. What did you do? What was the purpose?
Foster: We started with the idea that if we could build a building in Georgetown that could make its own energy at a price that is underneath our current rates, then that would be how we should design facilities going forward. We did early test results and we found that it produces solar energy at less than $0.06 per kilowatt hour, so when you think about that on a distributed scale and you go, “Okay, if we can do it, then other buildings in the city could do it.” Since we sell people power back at a full retail rate, we know that if we want to be an energy company 100 years from now, we also need to be an energy services provider, not just the energy company. So since we proved it can be done, we took the aspects of that building and we compared it against the aspects of every building in our territory via LIDAR data we flew in 2015, and so the LIDAR produces a 3D map of everything in the city, and we identified every rooftop that could produce power at the exact same rate as that building, and so it actually gives me a solar radiation figure of every hour of every day for every square meter of the city. Combining all that, now you have the layout of where you would build a virtual power plant across the city that is just as cheap as building a utility-scale plant out in West Texas.
Dixon: So basically, you created kind of a heat map of the best places to prioritize where you put solar in the entire city?
Foster: That’s right. We want to know where to strategically place assets that made the best sense for the grid, so people can look and they can say, “If I’m going to put solar as a citizen, does the it makes sense in this area?” And because we can overlay the distribution grid with that map we can tell the sizes of the distribution lines that all the way down the house so that we know, for example, that we can get 8 out of the 10 houses to do it before it changes our infrastructure. So it’s both, radiation value as well as capital value that goes into that model and to make it as cheap as possible for everybody.
Dixon: What’s the next step? What are you guys going to do with all this data?
Foster: We have a five-year plan to build a cash reserves in the utility and then once the cash reserves are where they want to be, they will be able to take money from the reserves every year and put it towards putting out distributed solar in various locations, and after we get a certain threshold of solar, we’ll go back and start layering in storage where it makes sense.
Rosenberg: Phenomenal and very educational for me. One thing I always try to do is bring the most value for the people that we interview is, if you could ask one question to the audience, if you got millions of responses or feedback, what would that one question be?
Foster: Wow. So yeah, well, what I always want to know from the general public is, what is your opinion of our strategic direction? If anybody is listening and they want to give their opinion, absolutely contact me..
Rosenberg: That’s good. So tell people how they can find out more about Georgetown.
Foster: Yeah, so if you want to know more about Georgetown, you can absolutely hit our website at georgetown.org, and it has probably as much information you want to know there.
Rosenberg: Well, thank you guys so much for listening to The Eco-Capitalist here with Chris Foster and Dave Dixon. I’m Steven Rosenberg, and I hope everybody has a green day.
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