Austin City Council blesses $558 million wind energy deal

March 1, 2014 by  
Filed under Green Energy News

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​Lincoln Energy and Austin Energy have inked an up to $558 million wind energy deal after City Council approved the deal at its Feb. 27 meeting.

Robert Grattan
Staff Writer- Austin Business Journal

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Lincoln Energy and Austin Energy will ink a deal worth up to $558 million after the City Council approved the contract at its Feb. 27 meeting. 

The deal will have Austin Energy purchase the full output of an about 300 megawatt, 160-turbine wind project that Chicago-based Lincoln Renewable Energy LLC is building in Castro County in West Texas. The new wind project is expected to be completed by the fourth quarter of 2015.

Under the terms of the deal, Austin will pay $31 million each year for 18 years in exchange for 300 megawatts of wind-generated electricity. 

Austin Energy had originally attempted to sign this contract with the North American branch of E.ON Climate and Renewables, but that Chicago-based company pulled out of the deal citing finance and tax issues after Council approved the contract last June.

In addition to switching providers, Austin Energy upped the size of the contract from 170 megawatts to 300 megawatts. While the total price tag is higher, the terms are more favorable – about an improvement of $2 per megawatt-hour over the original deal’s range of $28 per megawatt-hour to $38 per megawatt-hour, according to city staff.

The larger purchase is intended to take advantage of the federal production tax credit, which provides wind projects a tax credit of 2.3 cents per kilowatt hour. The credit expired at the end of last year and may not be replaced, potentially raising the cost of production for future wind projects. City staff recommended the larger deal to take advantage of the lower prices while they’re still around.

You can read more about the deal in our past coverage, online here.

Robert Grattan covers government, courts and economic development for the Austin Business Journal.

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