CenterPoint proposes $106M plan to cut carbon emissions from its gas system

CenterPoint Energy wants to invest $106 million over five years on a raft of clean energy pilot projects in Minnesota, from geothermal heating to home heat pumps.

The projects also would include using renewable natural gas, which is made from organic waste, and "green" hydrogen as supplements to carbon dioxide-emitting fossil gas.

CenterPoint, Minnesota's largest gas utility with more than 910,000 customers, filed the proposal late Wednesday with the Minnesota Public Utilities Commission (PUC). The PUC would need to approve the plan, the costs of which would be borne by CenterPoint's ratepayers.

While CenterPoint is asking the PUC now to approve $106 million in costs over five years, its longer-term plans eventually call for $196 million in clean energy projects. The company said the initial proposal would add about $1.50 to a typical residential monthly bill — or about $90 over five years.

CenterPoint, like all natural gas utilities, faces a conundrum: Its product, which is vital for home heating, contributes to climate change. Environmental groups are pushing to largely supplant residential gas use with clean electricity-based heat, which itself is a big challenge in a cold-weather state like Minnesota.

CenterPoint's new proposal comes under the 2021 Minnesota Natural Gas Innovation Act. The bipartisan law created a regulatory framework for gas utilities to invest in renewable energy and in innovative technologies to cut carbon emissions.

"CenterPoint Energy looks forward to the opportunities made possible by NGIA that will allow us to pursue multiple pathways to reduce or avoid emissions," Christe Singleton, CenterPoint Energy's vice president for Minnesota Gas, said in a statement.

The Houston-based company's plan includes 18 pilot projects and seven smaller research-and-development projects.

"It's too early to really assess [CenterPoint's] plan generally," said Joe Dammel, managing director for buildings at Fresh Energy, a St. Paul-based renewable energy advocacy group. But parts of the plan are encouraging, Dammel said, including three of the larger pilots.

One of those — costing $13.6 million over five years — focuses on "deep energy retrofits" to boost efficiency for residential customers. The program would involve the installation of air source heat pumps, which run on electricity with gas backups.

Another, costing $11.6 million over five years, involves building a "networked geothermal system" to provide heating and cooling for a yet-to-be-determined neighborhood. Such systems utilize a network of geothermal heat pumps to tap underground heat.

And a third, costing $7.1 million over five years, would help owners of small to medium-sized commercial buildings replace their heating, ventilation and air conditioning systems with hybrids built on heat pumps and a gas backup.

The largest proposed project — at $32.4 million — is purchasing renewable natural gas on the open market. CenterPoint would pay another $10 million to buy the product from an anaerobic digester being developed for Ramsey and Washington counties.

Renewable natural gas, which is made from the decomposition of organic waste, would be injected into CenterPoint's distribution system.

CenterPoint also has proposed a small green hydrogen plant in Mankato, which would complement a green hydrogen pilot CenterPoint launched in Minneapolis last year.

Green hydrogen refers to hydrogen produced with renewable electricity. CenterPoint mixes green hydrogen, which doesn't emit carbon dioxide, into its distribution system. The technology is promising, though it has many challenges, including high costs.

Renewable natural gas also has challenges, including building a supply chain to deliver and mix the stuff into gas pipelines.

Clean energy advocates question the efficacy of mixing hydrogen and renewable natural gas into residential distribution systems for heating and cooking.

"We don't think it's the best and highest use," Dammel said.