City of Austin Buys Nacogdoches Biomass Plant

Austin Energy announced Thursday it has reached an agreement with Southern Power to acquire the Nacogdoches Generating Facility, a wood waste biomass-fueled power plant in East Texas, for $460 million.
 
The 115 megawatt plant, which commenced commercial operation in 2012, currently provides 100 megawatts of renewable power to Austin Energy under a 20-year power purchase agreement. The transaction, which is expected to close in mid-2019, will allow Austin Energy to avoid approximately $275 million in additional costs over the remaining term of the agreement.
 
“Acquiring the biomass plant relieves our obligation to make escalating capacity payments to a third party and, over time, reduces the associated cost impacts to our customers,” said Jackie Sargent, Austin Energy’s General Manager. “This transaction is consistent with our efforts to manage our portfolio of generation resources in a responsible and cost-effective manner.”
 
While Austin Energy will take ownership of the plant, no immediate changes to the operation of the facility are expected, and its long-term status will be addressed in Austin Energy’s future resource planning efforts.
 
“Saving $275 million is a great result!” said Austin Mayor Steve Adler. “We play the hand we’re dealt, and here it means we’ll be able to provide value for our customers and maintain leadership on renewable sources of power. We’ve been working since I got into office to get a better financial deal around the biomass plant.”
 
Austin Energy has a target of offsetting 65 percent of its customers’ energy needs with renewable resources by 2027. In 2018, wind, solar and biomass energy combined to offset 38 percent of the energy needed to serve Austin Energy’s customers.