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Xcel Energy’s Plan to Eliminate Coal and Boost Solar in Minnesota

, lead Midwest energy analyst | May 20, 2019, 1:03 pm EDT
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Today, Xcel Energy released a preliminary plan to phase out its remaining coal-fired power plants in Minnesota and replace them primarily with wind, solar, and energy efficiency—moving the company forward toward its goal of 100% carbon-free electricity by 2050.

Part of the plan involves a consensus proposal joined by the Union of Concerned Scientists, other clean energy organizations, and the Laborers International Union of North America.

Below are some of the noteworthy items included in the consensus proposal and Xcel’s plan—and how they relate to Minnesota’s clean energy future.

1. Coal plant retirements

Xcel Energy will propose a 2028 retirement date for the Allen S. King coal-fired power plant and a 2030 or earlier retirement date for the Sherco 3 coal unit. Significantly, these plants are the company’s last coal-burning power generators in Minnesota for which Xcel has not yet announced retirement dates.

In the meantime, Xcel will also reduce coal usage at the Sherco 2 unit through committing to seasonal operation of the plant, a concept that my colleague Joe Daniel has written about here. Seasonal operation of coal plants has helped other utility customers save money and promotes grid flexibility to enable Xcel to integrate more renewable energy in the future.

Reducing and phasing out coal burning produces major carbon pollution reduction benefits as well as reducing public health impacts through lower soot and smog emissions (see our Soot to Solar report from last fall on Illinois coal plants).

2. Massive growth in solar power

Minnesota currently has close to 1,100 megawatts of installed solar power statewide. As part of the agreement with clean energy organizations, Xcel will propose the acquisition of 3,000 megawatts of solar power to add to its system by 2030. This is enough to provide 20 percent of Xcel’s energy, powering the equivalent of more than 417,000 homes and furthering reduce carbon pollution from the electric sector. This would add to Xcel’s addition of 1,850 megawatts of wind power by 2022.

3. Big commitment to energy efficiency

According to the Center for Energy and Environment, in 2018 Xcel achieved a record amount of energy efficiency: more than 680 gigawatt-hours of electricity savings, or about 2.35% of sales (well exceeding the state’s 1.5% energy savings target). In the consensus proposal, Xcel commits to include achievement of electric savings above that 2018 amount for the entire decade (2020-2029) in its planning.

This ambitious goal is based on the Minnesota Department of Commerce’s statewide energy efficiency potential study and would allow Minnesota to potentially join other states that are achieving 2-3% per year in efficiency savings.

Investing in energy efficiency helps utilities avoid more expensive measures and helps reduce customers’ energy bills which promotes energy affordability and reduces the energy burden.

4. Support from labor

The Laborers District Council of Minnesota and North Dakota (“LIUNA Minnesota”) joined the consensus proposal alongside UCS and other clean energy organizations. As part of the agreement, Xcel will commit to a request-for-proposals process for solar projects that maximizes local job creation and participation in apprenticeship programs.

5. The role of gas and nuclear

Gas-fired power plants are not clean resources and investing in them is a risky proposition for electric utilities. The Union of Concerned Scientists is part of a group challenging approval of Minnesota Power’s plan to build a new gas plant in Superior, Wisconsin.

However, we and other signatories to the consensus proposal are supporting Xcel’s acquisition of the Mankato Energy Center, an existing gas plant currently owned by Southern Company. Why?

Xcel already buys power from the Mankato plant, and the acquisition is being pursued in combination with the above aspects of an overall plan to decarbonize the company’s generation portfolio. Our analysis is that acquisition of the Mankato plant will not have significant impacts on greenhouse gas emissions and will help Xcel phase out its Minnesota coal plants by:

  • Reducing system costs associated with early coal retirements and incentivizing the decarbonization of sectors outside the electricity sector;
  • Displacing the need for large additions of gas combustion turbine generation in the 2030s and 2040s; and
  • Putting a large carbon emitter (the Mankato plant) under the oversight of the Minnesota Public Utilities Commission, an important step in ensuring beneficial resource planning for a carbon-free future.

Utilities are unfortunately rushing to build new gas infrastructure despite there being enough gas capacity online to meet demand. Still, Xcel Energy is not backing off from its commitment to be net carbon-free by 2050 and emissions from the Mankato plant will fall under that cap if the acquisition is approved and Xcel owns the plant.

With respect to nuclear, while it is not part of our consensus proposal, Xcel’s preliminary plan also includes an expectation of relicensing its Monticello nuclear plant and operating it at least until 2040. (To date, no nuclear reactor in the United States has received approval from the Nuclear Regulatory Commission to extend its operating license beyond 60 years, but three applications are currently pending.) This concept will require close examination by stakeholders and regulators on whether it is the most cost-effective path toward a 100% carbon-free electricity future and whether the plant can continue to operate safely beyond 60 years.

What are the next steps?

The consensus proposal will be reviewed by the Minnesota Department of Commerce and other stakeholders in a proceeding currently pending before the Minnesota Public Utilities Commission.

Stakeholders also can weigh in Xcel’s preliminary plan prior to the company’s integrated resource plan filing slated for July 1, 2019.

Finally, the measures outlined by Xcel Energy show that a low-carbon electricity system is achievable in Minnesota and should further support the legislature’s consideration of clean energy measures that I blogged about earlier this month, including establishing a goal for 100% carbon-free electricity by 2050.

Photo by Zbynek Burival on Unsplash

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