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How 100% renewables backfired on a Texas town – ‘Residents are seeing higher power rates’

An inconvenient truth is hanging over Georgetown, Texas: Its celebrated shift to renewable energy doesn’t look like a national model these days.

Electric rates are up. Critics are blasting the costs. And the city north of Austin is trying to figure out how to mitigate the situation.

Georgetown, whose green push gained global attention thanks to former Vice President Al Gore and others, can claim to have 100% renewable power thanks to a credit system tied to electricity purchases. In 2018, the city bought enough power from wind and solar projects to account for all of the community’s consumption. It also pays for power fueled by natural gas.

In all, the city contracts for more electricity than its municipal utility needs to serve customers — and that’s been a problem. Surplus power is sold into a market hampered by weak prices, often delivering financial losses instead of the returns Georgetown expected.

“It’s unfortunate that the Georgetown experiment went so quickly from being a success story to being something of a cautionary example,” said Adrian Shelley, director of the Texas office of Public Citizen, a consumer advocacy group.

Shelley remains optimistic about renewable energy’s growth in Texas and beyond. He tied Georgetown’s predicament to the specifics of the growing city’s plan to meet demand as well as lower-than-expected natural gas prices. In Texas’ main power market, electricity prices are heavily influenced by the price of gas.

But how the Georgetown saga plays out could affect how other areas with municipal utilities pursue and budget for renewables — especially if they lock in more power than they need. That’s important because cities and companies across the country are proposing renewable and net-zero carbon goals.

In Georgetown, which has about 75,000 residents, the city’s mayor remains hopeful about the future even as questions continue. The renewable energy push happened through a search for cost certainty and not a 100% renewables target.

“I think that there’s probably some lessons to be learned there for other cities that are interested in doing something similar,” said Kyle Harrison, an analyst who covers corporate sustainability at BloombergNEF, a market research firm.

Harrison said fixed-price renewable energy deals can be misleading in terms of potential long-term stability for what parties will pay for electricity. That became clear in recent years as generation tied to natural gas and renewables depressed Texas power prices.

When the market price is less than a fixed price in a power purchase agreement, Harrison said, a buyer typically has to pay the developer the difference. That led a number of companies in renewable deals to have “buyer’s remorse,” the analyst said. There is a potential upside for buyers when electricity prices rise.

Georgetown declined to discuss many of the details of its renewable contracts, but said on its website that the city “is still obligated to pay the price for energy we secured in our contracts” when the price of energy decreases. It also talked about looking to change its ongoing financial obligations related to energy contracts.

U.S. public power utilities cut carbon dioxide emissions 33% from 2005 to 2017, according to the American Public Power Association. Yet the situation facing Georgetown isn’t something the national group is positioned to solve. APPA told E&E News that one of the benefits of public power is local control and decisionmaking.