Austin Energy to buy biomass plant for $460 million

Texas public power utility Austin Energy on April 18 said that 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, Austin Energy noted.

“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.”

Austin Mayor Steve Adler noted that “We’ve been working since I got into office to get a better financial deal around the biomass plant.”

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.

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.