Renewables scored a major victory recently in the natural gas heartland that is Texas. In a resolution adopted by the Austin City Council on August 28, the city declared solar energy its default generation resource, in part noting “that solar energy represents a cost-competitive means of securing clean peak power hedging against the volatility of fuel-dependent thermal resources” such as natural gas.
Fixed-price renewables free insurance against price-volatile fossil-based power?
That same resolution improves how to calculate that hedge value in an updated methodology for Austin’s municipal utility, Austin Energy, in its value of solar tariff (VOST). The VOST was first considered in 2006 and eventually adopted in 2012.
Austin’s improved inclusion of an energy price hedge value (like the monthly premium of an insurance policy) for renewables such as solar and wind incorporates RMI’s recommendation—described in 2002’s Small is Profitable and further articulated in 2012’s Utility-Scale Wind and Natural Gas Volatility—to include such hedge value in electricity price “apples-to-apples” comparisons of price-volatile fossil-based power against fixed-priced wind and solar.