As utilities and communities grapple with how to plan for meeting sustainability and clean energy goals, it is helpful to remember that reaching such goals is not uncharted territory.
According to the Public Power Clean Energy Commitments tracker, at least 14 public power entities have already reached significant clean energy milestones. These include utilities that have reached a high proportion of renewables or non-carbon emitting sources within their supply, lowered emissions significantly, or made strides toward net zero or carbon neutral systems.
Reaching these goals is not something that happened quickly, but is likely the culmination of years or decades of planning and development. Reaching one milestone is also not often seen as an endpoint, rather a helpful recognition along a continued journey. And utilities continue to adapt as markets change the economics for the variety of resource options.
A Fall-Back Option
In 2017, the city council of Denton, Texas approved a plan that had a goal of reaching a 100% renewable power supply by 2021. Denton Municipal Electric, the public power utility serving the fast-growing city of more than 150,000 people to the northwest of Dallas, got to work to ensure the power supply options were in place once the plan was approved.
Terry Naulty, DME’s assistant general manager, characterized the community, which is home to two large universities, as very progressive, and that the city councilmembers hold views that match this mindset. The 100% goal built on a previous goal, set in 2012, to get to a 40% renewable supply by 2014.
Denton’s load is primarily served by two wind facilities and three solar facilities.
“We are among the top 10 fastest growing communities in the nation,” stressed Naulty. “That load growth requires us to add more renewable resources to the mix and additional back-up energy to account for the intermittency. The intermittency risk has to be dealt with in order to maintain the mandate but properly prioritize reliability for all customers.”
Continuing to manage a system that meets the 100% goal has not been without challenges. These challenges include everything from overcoming intermittency to transmission congestion and ensuring a relatively stable price. For the former, a key piece of DME’s plan was to build the Denton Energy Center, which is a natural gas fired facility that can come online within 10 minutes when needed. Since Denton is within the Electric Reliability Council of Texas market, it can also offer supply from the facility to the market, helping overall system costs.
Per DME’s website, “The Denton Energy Center acts as an insurance policy to ensure that electric supplies are available when intermittent renewable resources are not available. More importantly, it insulates DME customers from wholesale market price spikes that would otherwise have to be passed on to customers.”
Naulty noted that many community members had voiced opposition to having any combustion of fossil fuels, including an advocacy group that opposed the initial plan that included the energy center for backup.
Events since the plan was adopted have supported DME’s strategy to include the energy center, notably, when Winter Storm Uri hit Texas in early 2021.
“Winter Storm Uri laid bare the risks of reliance on 100% renewable,” said Naulty. “The takeaway was that not only do you need dispatchable generation, but fuel security for natural gas is an absolutely critical thing that generators in Texas had not put a huge priority on.”
Part of the difficulty with renewables in the ERCOT market, said Naulty, is that being focused on renewable capacity over energy doesn’t incentivize reliability as much as other markets. It also means wholesale prices can have wide swings based on a mismatch between output and demand. And, although Texas has an abundant supply of generating resources, including solar and wind resources, the majority of the renewable generation happens in remote parts of West Texas, far from its population centers. Building transmission and market mechanisms that allowed utilities to better hedge congestion were necessary first steps in being able to meet the mandate, shared Naulty.
Despite the challenges, DME has been able to maintain a way to continue to both meet its goal and achieve among the lowest rates in the state. In the latest Average Revenue Per Kilowatt-Hour Report from the American Public Power Association, which analyzed 2022 data from the Energy Information Administration, Denton reported an average of 10.6 cents per kilowatt-hour for residential customers, which is 13% lower than the residential average for all public power utilities in the state, 19% lower than cooperatives, 23% lower than investor-owned utilities, and 27% lower than average retail electric provider rates.
Because Denton has been able to show that meeting its goal is possible while maintaining reliability and affordability, Naulty said that DME’s strategy has become a model of sorts for how the ERCOT market could better incentivize dispatchable generation that backs up intermittent resources.
Both factors are also a boon for economic development in Denton. “One of the reasons [businesses] come is because we are a 100% supply community,” noted Naulty.
Naulty said that the 100% mandate will endure until the council develops another plan, if it does.
“Going 100% renewable shows DME’s ability to adapt to the community’s wants and needs,” said Naulty. “When the city council set that goal, there was no hesitation from DME to aggressively pursue it. It shows how we partner with the community to reach our goals.”
Anticipating What’s Next
In Vermont, all utilities, including community-owned utilities, are subject to the state’s renewable energy standard. That standard, set in 2107, set targets in different tiers that escalate each year, including ambitious goals for renewable generation, distributed energy resources, and electrification. The tier 1 target in the RES called for 55% renewable supply in 2017, going up 4% every three years until reaching 75% in 2032.
For Stowe Electric, a public power utility serving about 4,500 customers in a small town in northern Vermont, meeting the standard has meant staying ahead of it with careful planning. Stowe Electric’s portfolio is already ahead of the target, having exceeded 80% renewable supply in both 2022 and 2023, with an overall carbon neutral portfolio that includes purchasing renewable energy certificates to ensure compliance.
Jackie Pratt, Stowe Electric’s general manager, credits her predecessor, Ellen Burt, with planning ahead in helping the utility be well-positioned in continuing to meet the standard. A big piece of that planning was in developing a solar field that went online in 2016.
Michael Lazorchak, Stowe’s manager of regulatory affairs, said that part of the effort in staying ahead of the curve on the standard is anticipating what might come next and planning toward that option.
Looking ahead, Pratt and Lazorchak expressed some concern about the limitations in what resources will qualify for the standard in the future. This includes a nuclear facility that provided about 18% of its supply in 2023 and large hydroelectric facilities. About one-third of Stowe’s supply came from hydro resources in 2023.
“We plan to utilize nuclear and large hydro as long as we can until larger wind and solar projects can come online,” added Pratt.
The problem is getting local projects approved. Pratt said that new projects in the state have predominantly been solar facilities, but even those can be difficult to site, given the state’s tourism industry that focuses on its landscape and historic features.
That’s where Stowe is getting creative, including working on restoring an historic mill site for use as a hydro facility. The mill restoration project has received federal funding as well as a grant from APPA’s Demonstration of Energy and Efficiency Developments program. Stowe Electric is also adding small scale solar where it can, including onto municipal building rooftops.
“We’re trying to show that there are opportunities to showcase what a small utility can do,” said Pratt.
Recognizing the opportunities for projects, however small, is still only the first step.
“We can wait for the state to tell us what to do, or we can try to come up with creative ways to meet the standard and then pull more people in,” said Lazorchak.
“If you are a municipality that doesn’t have someone who’s going to step behind the project and push it through, you aren’t going to see it happen,” added Pratt.
Pratt and Lazorchak also noted that Stowe works closely with Energy New England on power supply planning, including in developing its latest integrated resource plan and helping to secure the RECs it will need.
Being a small state, both geographically and in population, means that the utility leaders have opportunities to interact more with state policymakers and weigh in on changes to legislation. Even in bigger states, Pratt stressed that it is important for utilities to be involved on discussions around standards before they get set in stone. “If you have a seat at the table in developing what that should look like, it's much more achievable for the utility because you can say what's possible and what’s plausible.”
“In the last 12 to 18 months, we’ve seen a recognition that climate change isn’t down the line, it is here,” said Pratt. “If we’re genuinely trying to mitigate carbon emissions in the interest of reducing the effects of climate change, this is an AND — not an OR — situation.”
“We're seeing regional competition for renewable energy credits, as different states are trying to meet their targets, whether it's Massachusetts or Vermont or Connecticut. If we can't find a way to fast track some of these larger projects and actually get them built, we're going to miss our targets. Everybody's got to be moving in the same direction, and we can't be fighting these little fights for two or three years to get one solar project built,” she added.
Local Control, Local Choices
In Ohio, the Oberlin City Council developed a Climate Action Plan in 2011 that set a goal of reducing greenhouse gas emissions 50% from 2007 levels by 2015, 75% by 2030, and below 100% by 2050. The plan included efforts across various sectors, including transforming the electric grid to be carbon neutral, which it achieved in 2020.
Oberlin Municipal Light and Power serves the small town of about 8,000 people that is home to Oberlin College. In its plan, the city credits having a community-owned system as being a critical part of being able to make and then act on decisions about its power supply.
“Obviously, when you own your own grid, you have more control of it,” noted Linda Arbogast, sustainability coordinator for the City of Oberlin.
As a small public power utility, the electric department’s power supply is primarily from purchase agreements and other contracts. A member of the joint action agency AMP, the utility worked to align its wholesale power purchases with the goal, including purchasing RECs to offset parts of the supply that were not carbon neutral. Arranging the contracts through AMP, said Arbogast, allows Oberlin to access certain resources along with other communities “in bulk”, which keeps the costs more economical, and, in turn, Oberlin’s rates within a median range.
Arbogast said that the community had to build toward being able to reach the goals, so that the goal could be reached without a need to dramatically raise rates.
“Customers aren’t having to pay for the fact that we have a green grid,” she said.
Maintaining the goal long-term requires monitoring how trends in the energy markets and demand will affect their purchases in the coming decades.
As an example, Drew Skolnicki, director of Oberlin Light & Power, pointed to the low cost of natural gas and how other industries use natural gas and landfill gas, and which industrial entities are finding electric alternatives. About half of Oberlin’s purchased supply comes from landfill gas. Skolnicki mentioned that he has seen plant that generated that power close, and instead process the gas for the natural gas pipeline, which is currently more economical.
“We don’t want customers to have their energy be unaffordable,” said Skolnicki. “Part of that challenge is, as these contracts drop off, being sure we can replace them.”
Skolnicki said that it also helps with keeping costs within a reasonable range when a diversity of resources can qualify for the mandate.
For public power, making local decisions, ensuring a diverse mix or making choices that affect costs starts with community education.
“You have to start with a supportive council and a community that demands it,” said Arbogast. “We don’t just expect to be a sustainable community, we expect to treat all residents equally. If you have to make tough decisions about resource use, our council says to focus on low-income individuals first.”
That focus has included ensuring there is a priority for weatherization and other activities to reduce the energy burden for individuals with lower incomes.
