Item 13- Presentation: Austin Energy’s Resource, Generation and Climate Protection Plan to 2035 Implementation — original pdf

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Austin Energy Resource, Generation and Climate Protection Plan to 2035 Implementation Recommendation Lisa Martin Deputy General Manager & Chief Operating Officer May 2026 © Austin Energy Item 13Agenda Challenges and Risks All-In Strategy Outlined in the Resource Generation Plan Implementation Progress Community Input Next Steps 2 Challenges and Risks How Did We Get Here? Retire Decker Steam Unit 1 September 2020 300 MW Retire Decker Steam Unit 2 March 2022 425 MW Summer Peak Demand Record August 2024 3,135 MW Winter Peak Demand Record January 2024 2,700 MW Summer Peak Demand Record August 2023 3,067 MW 2020 2021 2022 2023 2024 Plan to 2030 Adopted March 2020 Winter Storm Uri February 2021 Congestion Costs $135 Million Congestion Costs $154 Million ERCOT Market Changes & Increased Energy Costs ERCOT Market Telling Us: • Local Reliability Issues, Increased Outage Risk • Transmission Congestion, Increased Cost 5 Resource Generation Plan: Shifts & Challenges Since Plan Adoption Federal Changes Increased Costs and Challenges for Renewables Significant ERCOT Changes due to Projected Load Growth Extreme Weather Concerns & Reliability Focus Continues Improved Market Efficiency, but High Price Event Risk Remains 6 Resource Generation Plan: Key Risks Have Increased and Grown in Number Growth in Energy Consumption Extreme Weather / Climate Risk Local Reliability Risk Financial Risk Transmission Congestion ERCOT Market Changes Federal Changes Large Customer Loads 7 Real-World Risk: Load Zone Price Separation Locational Prices in ERCOT Market September 22, 2025 $50 /MWh avg earned across state The situation when the ERCOT market is signaling – through pricing – that we have insufficient supply to meet customer demand. 8 Hours Price Separation $5 Million Net Congestion Costs $660 /MWh paid inside local zone 9 Real-World Risk: Local Controlled Outages The risk of required customer power outages in Austin while the rest of ERCOT is unaffected. r a e y r e p s r u o H 600 400 200 0 Reliability Risk Hours Per Year 575 475 45 Austin Energy All-In Renewables + Batteries Portfolio Without Added Peakers Austin Energy All-In Renewables + Batteries + Portfolio + Peakers Peakers Austin Energy All-In Renewables + Batteries + Portfolio + Batteries More Batteries Instead of Peakers 10 Real-World Risk: Financial Exposure During a period of extreme weather, the financial performance of Austin Energy’s portfolio is critical to avoid high price exposure in the ERCOT market. 11 Real-World Risk: Financial Exposure During a period of extreme weather, the financial performance of Austin Energy’s portfolio is critical to avoid high price exposure in the ERCOT market. Extreme Weather Financial Risk 1,082 1,063 561 s n o i l l i M $ 1,200 1,000 800 600 400 200 0 48% Reduction in Extreme Winter Event Risk ($521M) 583 553 461 All-In Portfolio Without Added Peakers + Peakers + Batteries Instead of Peakers Winter Stress Winter Stress Summer Stress (2021: Winter Storm Uri) 12 Real-World Risk: Extreme Weather Climate change continues to create extreme weather, hitting central Texas worse than ever and bringing difficult and sometimes devastating results. All-In Strategy Outlined in the Resource Generation Plan We must meet Austin’s rising energy needs while enabling an equitable clean energy transition reflecting our community’s values. 15 Prioritize Customer Energy Solutions The 2035 Plan Our all-in strategy to keep energy reliable, affordable, and cleaner for everyone in our community. Leverage Local Solutions Achieve Decarbonization Further Our Culture of Innovation Implementation Progress Milestones Since 2035 Plan Adoption ● January ● Solar Standard Offer Program Launch ● February ● Battery Request for Proposals Launched ● April ● 2024 International Energy Conservation Code Adoption ● July ● 100 MW, 4-hour Battery Project Approved ● 195 City Facilities Enroll in Demand Response Program ● Solar Insights Tool Launched to Empower Residential Customers ● August ● Electric Vehicle Managed Charging Program Expands ● Evaluation, Measurement, Verification & Reporting Consultant Hired ● September ● Demand Response Annual Record of 57MW ● Energy Efficiency Programs Save an Additional 24MW ● Local Solar Install Annual Record of 18.8MW ● Stack Emissions at Record Lows ● October ● Wind Request for Proposals Launched ● Landfill Solar Request for Proposals Launched ● November ● All Resource Request for Proposals Launched ● December ● Solar Interconnection Process Streamlined ● First Commercial Solar Standard Offer Project ● Solar on City Facilities RFP Launched ● January ● Geothermal Pilot Expanded to 9.9MW ● Technology Readiness Assessment Updated ● DERMS Requirements Developed/RFI Launched ● February ● New Kramer Substation Energized ● Green Choice® Goes Solar ● March ● Battery Demand Response Pilot Launch ● Black Start Contract Renewed ● Power Partner Thermostat Program Boosts Incentives ● April ● Solar on City Facilities Contracts Approved ● 40 MW Distributed Battery Project Approved ● Landfill Solar Project Approved ● Import Capacity Project Submitted to ERCOT ● Residential Solar Leasing Option Launch ● Prioritize Customer Energy Solutions ● Leverage Local Solutions ● Commitment to Decarbonization ● Further Our Culture of Innovation 2025 2026 18 Resource Plan Goal Progress As of FY2025 Year End Energy Efficiency Thermal Energy Storage Demand Response 89% 2027 Goal 75% 2030 Goal 73% 2027 Goal Local Solar Local Battery Storage 92% 2027 Goal 92% 2027 Goal 19 Work Completed: Prioritizing Customer Energy Solutions Local Solar Install Annual Record of 18.8MW in FY25 Demand Response Annual Record of 57MW in FY25 Energy Efficiency Programs Saved 24MW in FY25 Solar Standard Offer Program Launched 2024 International Energy Conservation Code Adopted 195 City Facilities Enrolled in Demand Response Program Green Choice® Grew to Incorporate Solar Energy First Commercial Solar Standard Offer Project Unveiled Power Partner Thermostat Program Incentives Increased Solar Insights Tool Launched Empowering Residential Customers Solar Interconnection Experience Streamlined Residential Solar Leasing Option Launched 20 Work Completed: Developing Local Solutions 195 City Facilities Enrolled in Demand Response Battery Request for Proposals Completed Solar on City Facilities Contracts Approved Import Capacity Project Submitted to ERCOT 100MW, 4-hour Battery Project Approved 40 MW Distributed Battery Project Approved Landfill Solar Project Approved Black Start Contract Renewed All Resource Request for Proposals Completed Worker Protections Included in RFPs and Contracts 21 Work Completed: Continuing Commitment to Decarbonization 73% Carbon-Free Electricity Generated in FY25 Served 65% of Customer Usage with Carbon-Free Energy in FY25 165 MW Wind Power Purchase Agreement Renewed Wind Request for Proposals Launched Continuing Efforts to Exit Coal Total Stack Emissions Remain at Record Lows 60% Reduction in Carbon Dioxide Emissions Since 2007 22 Work Completed: Furthering Our Culture of Innovation Battery Demand Response Pilot and Battery Incentives Launched Geothermal Pilot Revived and Expanded to 9.9MW after Regulatory and Financial Uncertainties Distributed Energy Resource Management System (DERMS) Requirements Developed and RFI Launched Engagement with Nuclear Researchers, Manufacturers and Utilities Technology Readiness Assessment Updated Research and Development Partnerships with University of Texas, the Electric Power Research Institute and eSource 23 Utility-Scale Generation Implementation Phases We are here! Phase 1 Feasibility Phase 2 Pre-Development Phase 3 Development Phase 4 Construction Exploratory phase to assess range of options available Refinement phase to narrow options and develop recommendation for Council Administrative and legal phase prior to construction Building phase leading to commercial operation Enabling Efforts • Battery Request for Proposals • Landfill Solar Request for Proposals • Wind Request for Proposals • All Resource Request for Proposals • Peaker Feasibility & Pre-Development Work 24 All-Resource Request for Proposals Seeking Local Solutions • Can carbon-free resources effectively meet energy and risk mitigation needs? • Open to all technology types • Our energy and risk mitigation needs call for resources that are • Local Long Duration • • Commercially Proven 25 All-Resource Request for Proposals • 7 battery storage projects • 5 projects for natural gas technologies • No proposals for local solar • Austin Energy is recommending a third battery project for City Council approval Summary of Proposals 26 EXISTING GENERATION PORTFOLIO DETAILS • Wind: ~1800 MW • Solar: ~1000 MW • Natural Gas Peakers: 500 MW • Other Technologies: 1135 MW Utility-Scale Resource Additions 1. Solar: 8 MW 2. Battery: 100 MW 3. Battery: 40 MW 4. Battery: 100 MW 5. Wind: 149 MW 6. Wind: 150 MW 7. Peakers Austin Energy is a Leader on the Path to Carbon Free Carbon-Free Generation FY2025 Energy Generated from Austin Energy Assets FY2025 AUSTIN ENERGY 73% ERCOT 46% USA 42% Biomass 1% 73% Carbon-Free Generation Wind 31% Solar 15% Coal 10% Natural Gas 17% Nuclear 26% 28 Why are Peaker Units Necessary? • Essential insurance. • Complement batteries to cover long-duration events. • A critical reliability backstop mitigating extreme risk. • Enable more renewable investments. • Provide necessary black start capability. 29 Emissions Guardrails 1 Prioritize Renewables Peakers never displace renewables that can reach the point of customer demand. 2 Batteries Deploy First Batteries deployed first for short-duration needs, when demand peaks and prices rise, if they are charged. 3 New Peakers Before Old New, more efficient peakers dispatch when needed, then Sand Hill peakers, then Decker peakers, if necessary. 4 Run-Time Limitations Peakers have run-time limitations based on air permits. New peakers will have best emission controls. 5 Carbon Intensity Guardrails All peakers are guided by carbon intensity guardrail metrics. 30 Expectations For New, Local Utility-Scale Resources Workforce Protections Air Quality Standards Including Workforce Safety and Protection in All Agreements Protecting Local Air Quality Equity Considerations Incorporating Equity into Siting Considerations 31 Siting Considerations Site Evaluation Process ▪ Challenge: Need for generation and energy storage resources locally ▪ Approach: Phased process to identify & screen potential sites Site Evaluation Process ~400 sites Phase I: Site Identification ~60 sites Phase II: Site Screening 14 sites Phase III: Site Shortlist 34 Phase I: Initial Site Identification LEGEND Phase I Site Location Austin Energy Service Area 391 total sites Initial Site ID Criteria: ▪ Proximity to Austin Energy service territory ▪ Ownership (preference for City-owned property) ▪ Size (developable acreage) ▪ Accessibility ▪ Proximity to 100-year FEMA floodplain ▪ Environmental constraints 35 Phase II: Feasibility Screening LEGEND Phase II Site Locations Edwards Aquifer Buffer Zone Edwards Aquifer Recharge Zone 58 sites screened from initial 391 sites Screening Criteria: ▪ Topography ▪ Vegetation ▪ Wildfire risk ▪ Proximity to water service ▪ Proximity to high-volume natural gas infrastructure ▪ Proximity to transmission infrastructure 36 Phase II: Feasibility Screening LEGEND Phase II Site Locations Gasline Routes Transmission Corridors Edwards Aquifer Buffer Zone Edwards Aquifer Recharge Zone *Proximity to Balcones Land Preserve 58 sites screened from initial 391 sites Screening Criteria: ▪ Topography ▪ Vegetation ▪ Wildfire risk ▪ Proximity to water service ▪ Proximity to high-volume natural gas infrastructure ▪ Proximity to transmission infrastructure 37 Phase II: Feasibility Screening LEGEND Phase II Site Locations Gasline Routes Transmission Corridors Edwards Aquifer Buffer Zone Edwards Aquifer Recharge Zone 58 sites screened from initial 391 sites Screening Criteria: ▪ Topography ▪ Vegetation ▪ Wildfire risk ▪ Proximity to water service ▪ Proximity to high-volume natural gas infrastructure ▪ Proximity to transmission infrastructure 38 Phase III: Shortlisted Sites LEGEND Phase III Site Locations Gasline Routes Transmission Corridors Edwards Aquifer Buffer Zone Edwards Aquifer Recharge Zone 14 shortlisted sites Selected for more comprehensive site- specific due diligence: ▪ Current status of property ▪ Specific development restrictions due to environmental constraints ▪ Previous land use ▪ Redundancy of gas supply ▪ Existing reusable industrial infrastructure onsite/nearby ▪ Site visits 39 Community Engagement Workshops Workshop Outreach Notifications for the three in-person and virtual community workshops through the following channels: 172,000+ Customers Received emails with an initial invite and a follow-up reminder 84 Stakeholder Groups Received emails and phone calls. Included elected officials, neighborhood assns., schools and community organizations in areas near potential sites 30+ Social Media Posts Posted across all Austin Energy platforms: Nextdoor, Facebook, X, Instagram, Linkedin Speak Up Austin Posted workshop dates, materials and a comment form online for all to participate 41 What We Asked What is missing in the evaluation criteria or site selection process? What We Heard – Site Selection ▪ Distribute potential impacts fairly and demonstrate how community input shapes decisions ▪ Further consider the threat of wildfire risks due to implementation of batteries ▪ Consider proximity to emergency services and proximity to schools ▪ Include health, environmental, and equity analysis considerations ▪ Consider perpetuating impacts on low-income communities due to location of existing natural gas pipelines ▪ Consider impacts on outside City customers if putting utility-scale resource sites only on the edges of the service territory 43 What We Asked ▪ What are your concerns about potential sites? ▪ How can Austin Energy be a good neighbor in an area where a site is selected? What We Heard – Concerns ▪ Equity and disproportionate burden — concern that East Austin and vulnerable communities bear more impact, concerns about ratepayer burden ▪ Construction and community disruption — traffic, infrastructure changes, and neighborhood character impacts ▪ Health and environmental impacts — air pollution, noise, safety risks, and long-term ecological effects ▪ Peaker units — emissions, mission creep beyond “peaker” use, and fuel reliability/price volatility 46 What We Heard – Being a Good Neighbor ▪ ▪ ▪ Engage community early and establish education campaign prior to site selection Support fire management/risk training for Austin Fire Department Set clear guardrails on emissions, operations, and long-term use of facilities ▪ Mitigate impacts and share benefits locally ▪ ▪ ▪ ▪ Avoid condemnations when possible Implement public-friendly landscaping and consider agrivoltaics Provide air filters for residential homes Ensure that gas supply is clean to limit greenhouse gas emissions 47 What We Heard – General Feedback ▪ Clarity on need, goals and alignment — define total capacity needs, resource mix and consistency with 2035 carbon-free goals ▪ Technology-specific evaluation — clearer differentiation of impacts and suitability (peaker vs. battery vs. solar), not a one-size-fits-all approach ▪ Cost and risk transparency — include long-term financials, natural gas price volatility and full lifecycle comparisons ▪ Process transparency and alternatives — earlier notification of engagement opportunities, clearer decision framework and consideration of additional technologies and expanded distributed solutions (e.g. customer energy solution programs like distributed battery storage and rooftop solar) 49 Next Steps Next Steps • May 19 Austin Energy Utility Oversight Committee • May 21 City Council Consideration Customer Driven. Community Focused. ©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.