Austin Energy, the electric utility company in the Dallas suburb, is planning to sell its thermal energy business to a Texas energy company.
The sale, which is expected to close in the third quarter of 2019, will give the Austin Energy Group, based in Dallas, an opportunity to tap into a large and growing pool of thermal energy.
It will also give Austin Energy an opportunity for the company to invest in a thermal energy system that could eventually become a major part of its electricity system.
“It’s just about making sure that we have an efficient thermal energy solution for the community and that we can provide a good price to the community,” Austin Energy Chairman and CEO James Hoehn said.
“I think there’s a lot of opportunities for Austin Energy to be in the market to do this, and that’s something we’re looking forward to doing.”
Austin Energy has been in the business of providing electric power to Texas for nearly 40 years.
It has about 700 employees and generates about $100 million in revenue each year.
In the past few years, Austin Energy has also seen the emergence of a new generation of thermal technologies and the need for an efficient power generation technology.
That was reflected in the announcement earlier this year that it was acquiring Sempra Energy, a company that has been operating in the thermal energy space for nearly three decades.
Hoehn says the acquisition will give Austin a chance to invest more in the sector.
“We see an opportunity here with Sempras that we are interested in,” he said.
“They have a very good business model in thermal energy and we are looking forward that they will continue to be the leader in that space.”
The sale of Austin Energy’s thermal energy service business is a major change in the company’s business strategy.
Hoehm says it’s also a move that Austin Energy is making to compete with Seampra.
“Austin Energy is not going to be able to compete in the heat pump market.
We need to compete and that means we are going to invest,” he explained.”
So, we are really looking forward with Sembra Energy to take this opportunity to develop the same product, which we have been investing in the last five years.”
Austin’s thermal power business is in the midst of a $4 billion investment that will see the company add hundreds of employees.
The company has also invested in the development of new technologies, including advanced thermal thermal batteries, which can store heat and convert it into electricity.
Austin Energy will also be selling off assets from its existing utility business.
The utility company owns and operates a majority of the Austin Electric Transmission District, which supplies electricity to the city of Austin.
Austin’s utility has also been struggling financially.
Austin Energy had a net loss of $15 million in fiscal year 2019, and it lost about $10 million in the first half of 2020.
Austin said in a press release that it is looking to reduce costs by $2 million in 2019 and $3 million in 2020.
Hoeshn says Austin Energy will be looking to improve the efficiency of its thermal power systems.
“The new technology is being tested with real customers in Texas, and I think that we’re going to see more efficiency,” he added.
“We’ve invested a lot in thermal power, so we have to keep investing and improving.”