Xcel drops plan for big new gas power plant in Becker

Faced with criticism from environmental and clean energy groups, Xcel Energy has nixed plans for a big natural gas plant in Becker that would have cost roughly $800 million.

Instead, the company said Friday it now plans to build two smaller natural gas plants — one each in southwestern Minnesota and North Dakota — at less than half the cost of the planned Becker plant.

The smaller plants also would operate only sporadically to even out renewable power production, not almost continuously like the planned Becker plant, thus emitting far less greenhouse gases.

In addition, Xcel said Friday it will increase its wind and solar power capacity by 27% over the next decade, more than previously planned and at a faster rate. And for the first time, the Minneapolis-based company revealed plans for significant energy storage facilities in Minnesota.

Storage, usually in the form of batteries, is seen as a key building block of a carbon-free grid, capturing electricity produced by wind and solar. Xcel did not disclose details of its storage plans, saying battery deployment wouldn't begin until about 2030.

"We have an important milestone in our resource plan today," said Christopher Clark, Xcel's president for Minnesota. The company's announcement Friday is a revision of its integrated resource plan, an important proposal before the Minnesota Public Utilities Commission (PUC).

Clean energy groups that have fought Xcel's gas plant praised the company's new plan.

"We are really delighted about this proposal and think it is a huge step forward," said Ellen Anderson, climate program director at the Minnesota Center for Environmental Advocacy. "It is a big win for climate in Minnesota."

Xcel said its new plan would save customers about $600 million over time and reduce its carbon emissions 85% by 2030, compared with an 80% reduction in the company's original proposal.

Xcel's new plan also calls for two new transmission lines aimed at integrating more renewable power on the electricity grid, which is increasingly congested. The two lines would use Xcel's grid interconnection rights at Becker and its coal plant in Oak Park Heights.

Xcel, Minnesota's largest electricity provider, had planned to build a roughly 800-megawatt natural gas-fired plant at its Sherco site in Becker, where three large coal plants currently operate. Xcel plans to close those plants — and all of its coal generators in Minnesota — between 2023 and 2030.

Xcel had pitched the new gas plant as a replacement for coal, and a necessity for the reliability of its electric grid, particularly as more wind and solar — both variable sources of power — come online.

Gas plants emit about half the carbon dioxide as coal generators, but they are still significant greenhouse gas emitters, environmental and clean energy groups say.

Several of those groups had criticized the Becker plant as unnecessary in filings with state utility regulators. "One consistent theme in them was pretty strong opposition to our Sherco gas plant in Becker," Clark said.

Xcel's new plan is a big blow to Becker and Sherburne County, which Clark acknowledged. "I think they will view it as a significant loss of property taxes," said Clark, adding the company is working with Becker to minimize the economic losses.

Also, Xcel will continue its plans to build a $575 million solar plant in Becker, which would be four times larger than the state's current largest solar array.

However, the solar plant would not generate as much tax revenue as the gas plant would.

"We are disappointed in Xcel's decision," said Tim Dolan, a Sherburne County Commissioner who represents Becker. "We had hoped the new gas plant would be part of the [energy] transition for Becker and Sherburne County."

Xcel's new plan is quite a turnaround considering the company pushed to get a state law passed in 2017 authorizing the Becker gas plant. The move was seen by some as an end run around the PUC.

However, Xcel's plans for a roughly $200 million gas pipeline to feed the Becker plant would still need PUC approval — at a time when oil and gas pipelines are meeting stiff resistance from environmental groups.

Under the new plan, Xcel plans to refurbish two of its existing gas generators in addition to building new plants — one in Lyon County, Minn.; the other near Fargo. Each would have 400 megawatts of generating capacity, roughly the same together as the Sherco gas plant.

But they would be "peaker" plants, running only when demand is particularly high.

The plants would have a 5% "capacity factor," compared with 80% for the proposed Sherco gas plant, said Bria Shea, Xcel's director of regulatory strategy. "The capacity factor makes them a very different resource."

Clark said the new gas plants would still be needed for grid reliability since the sun isn't always shining, and the wind isn't always blowing. "It's really the ability to call on a resource to run when we need it to run," he said.

Xcel's energy storage proposal — though not fleshed out in its plan released Friday — is also aimed at bolstering grid reliability. Batteries, by storing electricity, are essentially a dispatchable source of power like a gas or coal plant — at least until they are drained.

"This is really great news," Anderson said of Xcel's new storage plan. "We have been pushing them to put more storage in their integrated resource plan."