Item 10- Presentation: Value of Solar — original pdf

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April 2026 © Austin Energy 2026 Value of Solar Update Tim Harvey Director, Customer Renewable Solutions Item 10Agenda Value of Solar Overview Rate Calculation Methodology Rate Adjustment Plan Future Calculation for Societal Benefits Questions 3 Value of Solar Overview Credits solar customers for the energy produced by their on-site solar systems Why the Value of Solar • Provides consistent value for solar production for simplicity and equity • Recovers fully through the Power Supply Adjustment • Eliminates unintended subsidization and undervaluing • Maintains behavioral cost signaling through tiered consumption rates Updating the Value of Solar Rate Looks backward for a known and measurable approach • • Calculated as average of previous five years of avoided costs • Updates once every three years • 3 Scheduled implementation: November 2026 with updates through the FY27 budget process Value of Solar Structure Components Description A V O I D E D C O S T S ERCOT Energy Savings The weighted average of the price of energy in the ERCOT market at the time that solar energy is produced Transmission Savings Calculates savings based on the average generation at peak times, the sum of wholesale transmission service charges, and the total solar generation Ancillary Services Savings The weighted average of the cost to make sure that the right number and type of power plants are running (to prevent an outage) Societal Benefits References the federal social cost of carbon report based on integrated assessment models and Texas-specific carbon per kWh Secondary losses are incorporated into utility avoided costs 4 Value of Solar 2026 Rate Update • Less than 1 MW = $0.1288/kWh • More than 1 MW = $0.1021/kWh Value of Solar Rate Components with Secondary Losses Annual Assessment Year Values FY21 FY22 FY23 FY24 FY25 Five-Year Average ERCOT Energy $ 0.0658 $ 0.1005 $ 0.0940 $ 0.0355 $ 0.0280 $ 0.0648 Transmission Savings $ 0.0267 $ 0.0273 $ 0.0310 $ 0.0301 $ 0.0184 $ 0.0267 Ancillary Services $ 0.0106 $ 0.0050 $ 0.0057 $ 0.0004 $ 0.0002 $ 0.0044 Societal Benefits $ 0.0222 $ 0.0226 $ 0.0219 $ 0.0496 $ 0.0485 $ 0.0330 Total <1MW $ 0.1253 $ 0.1553 $ 0.1526 $ 0.1157 $ 0.0952 $ 0.1288 Total >1MW $ 0.0986 $ 0.1280 $ 0.1216 $ 0.0856 $ 0.0768 $ 0.1021 5 Next Steps Rate Updates on Web FY2027 Budget Process Effective November 1 Updated Value of Solar rates posted to Austin Energy website Rate changes adopted through FY27 budget process New Value of Solar rates effective November 1 6 Next Year: Update Calculation for Societal Benefits • Calculation methodology needs to change • Stakeholder process to explore new methodology Current Societal Benefits Calculation Social Cost of Carbon (SCC) X Carbon Dioxide Emissions Intensity for ERCOT grid History of Social Cost of Carbon (SCC) Variable • • In 2021, SCC used 3% discount rate (White House 2021). In 2023, the Environmental Protection Agency removed 3% discount rate, making 2.5% the least conservative rate. • New federal policy sets SCC at $0/kWh. Calculating Societal Benefits in the Future In FY27, Austin Energy will engage with stakeholders to update how it calculates societal benefits. 7 ©Austin Energy. All rights reserved. Austin Energy and the Austin Energy logo and combinations thereof are trademarks of Austin Energy, the electric department of the City of Austin, Texas. Other names are for informational purposes only and may be trademarks of their respective owners.