Xcel to double down on renewable energy in Minnesota

Xcel Energy Inc. said Friday that it wants to more than double the amount of electricity it gets from wind and solar in the Upper Midwest.

The company, which serves 1.2 million electric customers in Minnesota and has the most wind power of any U.S. utility, said further expansion of renewable energy over the next 15 years will bring a 40 percent reduction in its greenhouse gas emissions by 2030. It also could mean higher utility bills for consumers.

In a mandatory long-range resource plan, Xcel told state regulators that it doesn't want to shutter its remaining two coal-burning power plants in Minnesota. Instead, it proposes to operate them less frequently, reducing their emissions overall while planning for their eventual retirement.

"Customers certainly want cleaner, greener energy, so we are trying to be responsive," said Chris Clark, who took over Thursday as president of Xcel's Minnesota regional division, which also serves parts of North Dakota, South Dakota, Wisconsin and Michigan.

Clark said the costs of wind farms and large solar parks are coming down, making them competitive with natural gas-based generation, which Xcel also plans to increase. Wind power, which now makes up 15 percent of Xcel's Upper Midwest energy, would increase to 25 percent in 2030. Solar, which is well under 1 percent today, would climb to 8 percent and hit the 10 percent state goal through the purchase of renewable energy credits, Xcel said.

Utilities are required to submit long-range plans to serve customers. Because Xcel is a regulated, investor-owned monopoly, the Minnesota Public Utilities Commission reviews and potentially could alter the plan after hearing from other interests, a process that takes months. Xcel said it is open to working with environmental groups, business organizations and others who have concerns about the outcome.

Some environmental groups have been lobbying Xcel to retire its two, large, 1970s-era coal units at the Sherco power plant in Becker, Minn. Instead, Xcel proposes to reduce that coal-generated electricity gradually from 37 percent this year to 29 percent in 2030. That would be done by dialing back the output at Sherco and its other Minnesota coal plant, Allen S. King, in Bayport.

At the same time, Clark said, Xcel doesn't plan to make significant new investments in those plants — as two other Minnesota utilities are doing with their large coal burners. Clark said he recognizes that some groups favor shutting down older units at Sherco, which is the state's largest emitter of carbon dioxide. The utility has proposed collaborative review of the plan so all interests are heard.

Under Xcel's plan, electricity from solar panels would see exponential growth in Minnesota, from about 14 megawatts today to 2,400 megawatts in 2030. A megawatt is 1 million watts. Most of that would be large, utility-scale solar, but Xcel also projects a consumer-driven increase in rooftop solar and community solar gardens, whose output is shared by subscribers.

Xcel's wind power in the Upper Midwest would increase about 70 percent, adding another 1,800 megawatts by 2030. That includes 600 megawatts — about three new wind farms — in this decade. Those projects are on top of the four new wind farms Xcel is adding this year in Minnesota and North Dakota.

To back up the intermittent wind and solar, Xcel proposes 1,750 megawatts of new natural gas "peaking" plants, which are fired up only when needed. Those plants are in addition to two new gas-fired generators approved by regulators in December to be built in Mankato and Burnsville.

"Renewable pricing is competitive throughout the 15-year period," Clark said in an interview. "We have seen this with wind, where over time the wind prices have come down and wind has competed effectively with gas. Our projections are that we are going to see utility-scale solar certainly competing with gas in the 15-year period."

Clark said the renewable energy investments likely would raise customers' rates about 2 percent over what would be expected otherwise. Xcel has a rate hike pending before Minnesota regulators, and has said more increases are likely as it wraps up its current investment cycle.

"We will see continued rate increases," Clark said.

Xcel projected that demand for electricity will increase just 0.4 percent each year, far short of the 1 percent to 2 percent annual increases utilities saw before the recession. Clark said Xcel expects its Minnesota investments to drop from is a recent pace of $1 billion a year to about $750 million annually, and then possibly climb again in the 2020s.

The fate of Xcel's two nuclear power plants, at Monticello and Red Wing, Minn., are not addressed in the plan. Both have been heavily upgraded at a cost of more than $1 billion to keep them operating into the early 2030s.

David Shaffer • 612-673-7090 Twitter: @ShafferStrib