Matt Goes Green

Austin Energy plans to ask its local city council for approval to build a $2.3 billion biomass power plant in East Texas, the Austin Business Journal reports. Nacogdoches Power has agreed to construct and operate the plant and sell power to Austin Energy over the course of a proposed 20-year contract. The plant will burn woody wastes, including sawdust and tree trimmings, to generate some 100 megawatts of electricity. Austin Energy COO Michael McCluskey told the Journal that he hopes the council members will review the contract when they meet on Aug. 7.

The city of Austin has set a goal of getting 30 percent of its electricity from renewable sources by 2020. Austin Energy currently only gets about 6 percent of its energy from renewable sources, and John Baker, the company’s chief of strategy, told us earlier this year that wind energy alone wouldn’t get them to 30 percent.

While Austin Energy is adding more wind energy to its portfolio, the utility is also pursuing solar energy. If all the planned wind, solar and biomass come through on schedule, Austin Energy could be getting as much as 18 percent of its energy from renewable sources by 2012.

Long-term contracts like this one are what the nascent renewable energy market needs as it develops. As this Forbes article explains, “without a dedicated buyer, banks and investors will not fund the projects.”” Massachusetts recently reformed its energy laws to require utilities to buy renewable energy on 10- or 15-year contracts.