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Austin Energy’s plan to build a power plant faces opposition from oversight board

A power plant inside a chain-link fence at night.
Gabriel C. Pérez
KUT News
Austin Energy's proposal to build a natural gas plant that it said could eventually convert to use hydrogen fuel was rejected by the Resource Generation Plan Working Group over air pollution and water usage concerns.

Austin Energy’s plan to build a new power plant was rejected this week by a key working group of the city’s Electric Utility Commission, which warned the project was too expensive and not in line with city climate goals. The criticism, though not unexpected, puts the city-run utility even further at odds with many on the commission.

Austin Energy had worked for the past two years on the proposal to build a natural gas plant that the city-run utility said could eventually be converted to use hydrogen fuel.

The Resource Generation Plan Working Group on Monday rejected the idea of building the natural gas power plant, citing concerns over air pollution and water usage.

The working group is tasked with reviewing Austin Energy’s plans for future power generation and achieving the utility's climate goal of being carbon emissions-free by 2035.

The group is composed of members from Austin’s Electric Utility Commission, itself a citizen oversight board appointed by the Austin City Council that will eventually vote to approve or reject the utility’s generation plan before the council weighs in.

Not ‘a wise decision’

The working group expressed concerns that converting the plant to a more climate-friendly hydrogen-powered plant at a later date was unrealistic.

“Our main concern is — Is it going to be available at the cost? And — What are the impacts on local air pollution?” Electric Utility Commissioner Cyrus Reed said. “The working group felt that betting on that technology today in 2024 may not be a wise decision.”

Instead of moving forward with the plan from Austin Energy, Reed, who is a member of the working group, and others proposed an alternative for meeting future energy needs without a new power plant. That plan relies heavily on adding renewable energy, enhancing local solar power and energy efficiency.

After hearing from the working group, Lisa Martin, Austin Energy’s chief operating officer, said she shared the goal of prioritizing renewable energy. However, she suggested that elements of the recommendation don’t address the affordability and reliability challenges Austin Energy is facing.

“We need to be agile and responsive on how we get to a clean, efficient energy future,” Martin said.

Hydrogen, a bridge to nowhere?

Austin Energy had presented its plan to build a new gas power plant as a sort of “bridge” to a cleaner energy future, announcing that it would convert the plant to use hydrogen fuel by 2035.

The Resource Generation Plan Working Group was skeptical. It concluded that the technology used to generate power through green hydrogen is too costly. The technology requires a reliable supply of renewable energy and has a high demand for water supply.

In addition, supply-chain issues for electrolyzers — the device that generates hydrogen power — make the technology expensive, the group said.

The working group also said that no available or affordable zero-emissions green hydrogen supply exists within the state. Even if the necessary supply existed, the combustion pipeline used for the new plant would take years to build and would likely miss the city's goal of carbon-free utility emissions by 2035.

A hydrogen combustion pipeline can also lead to higher levels of nitrogen oxide air pollution compared to natural gas, according to a 2018 report published in the International Journal of Hydrogen Energy. Nitrogen oxide can cause adverse health effects, such as worsened respiratory issues like asthma.

Austin already exceeds federal ozone levels, utility commission member Kaiba White pointed out during the meeting.

“It’s bad for public health that we have air that is over health-based standards,” she said. “Adding another source was something that the working group did not endorse.”

The disagreement over the proposed gas-to-hydrogen power plant is the most recent clash between members of the Electric Utility Commission and Austin Energy since the city utility announced it would not close its coal-powered electric generation unit at the Fayette Power Plant.

That move, announced in 2021, caused some commission members to publicly question Austin Energy’s commitment to meeting emission reduction goals.

The Fayette plant still stands as “the big behemoth” setting net zero targets back, Commissioner Reed said at the Monday meeting.

Though use of the Fayette plant is decreasing, it was still responsible for 29% of carbon dioxide emissions for the City of Austin in 2021 and 77% of the carbon produced by Austin Energy in 2022. The Fayette plant stands as the single largest source of greenhouse gas emissions for Austin, according to the Electric Utility Commission.

After hearing the working group recommendations, Austin Energy General Manager Bob Khan told commissioners “We want to take time and look at what you did. We’re going to take it serious. We're going to look at it and see if there’s anything in there that we can incorporate.”

Austin Energy is set to meet with the Electric Utility Commission with updates to the generation plan on March 18. Ultimately, the commission will make its recommendations, before the plan goes to Austin City Council for a vote.

You can find the Electric Utility Commission's full recommendation document online at their website. A recording of the Monday meeting, when it becomes available, can be found there as well.