As price drops, renewable energy surges to second place in Minnesota

Renewable energy has moved into second place as Minnesota's largest source of electricity generation, nudging out nuclear power but still trailing coal.

Meanwhile, the cost of wind energy in Minnesota — even without tax subsidies — now appears lower than electricity produced from both natural gas and coal.

Both conclusions come from a report released Thursday by Bloomberg New Energy Finance, which tracks power generation trends nationally. The report was presented at an event in St. Paul hosted by the Business Council for Sustainable Energy and Clean Energy Economy Minnesota, two industry-led nonprofit groups.

The Bloomberg report also found that over the past few years, even though renewable energy costs have fallen, electricity price increases in Minnesota have accelerated.

Minnesota has gone from having retail electricity prices that were a little below the national average to roughly average. The average retail electricity price in Minnesota rose 13 percent from 2013 to 2017, the Bloomberg report said.

Renewable energy made up 25 percent of the state's electricity generation in 2017, up from 23 percent in 2016 and 21 percent in 2013. Wind power alone accounted for 18 percent of Minnesota's generation last year, with hydro and solar comprising most of the rest of the renewable category.

Nuclear power accounted for 23 percent of Minnesota's generation mix in 2017, the same as the previous year. Coal-fired power was still king with a 39 percent share in 2017, the same as a year earlier.

However, coal's share of the power mix in Minnesota is down from a range of 43 percent to 49 percent between 2012 and 2015. Natural gas-fired power made up 12 percent of Minnesota's generation last year, down from 15 percent in 2016.

Coal's decline in Minnesota mirrors national trends. Utilities are increasingly switching to natural gas, a cheaper fuel than coal. Also, state mandates have prompted a move away from coal to more environmentally friendly renewables and natural gas.

Tax breaks have made wind and solar power more attractive for power producers, but wind energy in Minnesota — and other states with rich wind resources — is a low-cost alternative even without subsidies.

In 2017, unsubsidized wind power cost $45 per megawatt hour in Minnesota on a levelized cost of electricity basis, which takes into account the cost to build a generation asset and its total power output, according to the Bloomberg analysis. Nationally, unsubsidized wind energy was $51 per megawatt hour on average, while natural gas clocked in at $49 per megawatt hour.

Bloomberg didn't provide state cost data for coal or natural gas. Nationally, coal-fired power cost $66 per megawatt hour on average last year.

In 2017, the unsubsidized cost of solar power in Minnesota fell dramatically, the Bloomberg report said. In 2016, it was around $125 per megawatt hour; last year, it was $76 per megawatt hour.

The Bloomberg report also found that Minnesota scored well in terms of its overall energy efficiency programs and policies, ranking ninth out of all states in 2017, up a notch from 10th the previous year.

Also, Minnesota's power sector slashed its carbon emissions 27 percent from 2005 to 2017, the report said. Still, its carbon emission rate is higher than the national average.

Mike Hughlett • 612-673-7003