Xcel's plan to 2030: Close two coal plants, extend nuclear plant, add more solar

Xcel Energy plans to close two more coal-fired power plants several years early and exit coal generation in Minnesota by 2030, while at the same time extending the life of its Monticello nuclear plant by another decade to 2040.

The Minneapolis-based utility said Monday it also expects to more than triple the amount of its solar power generation by 2030.

The moves are part of Xcel's long-term target of reaching carbon-free energy by 2050, a difficult task. "I don't think any other utility in the nation has this aggressive of a goal," CEO Ben Fowke said.

With its new resource plan, Xcel will meet its goal of an 80% carbon reduction in power generation over the years 2005 to 2030, Fowke said. The company expects its electricity production — including nuclear power — to be 75% carbon-free by 2030. However, that is short of its previous goal of 85% carbon-free power by then.

Xcel's announcement was part of a long-term resource plan it must file with Minnesota utility regulators every few years. In the last plan, Xcel, Minnesota's largest utility, announced it would close two of its three big Sherco coal generators in Becker in 2023 and 2026, respectively.

With the new plan, Xcel would close its majority-owned Sherco 3 in 2030 — 10 years ahead of schedule — thus ending Becker's position as Minnesota's largest electricity producer since the 1970s. Xcel would also shutter its Allen S. King coal plant in Oak Park Heights in 2028, nine years early.

The two new closures would essentially lead to the loss of about 180 jobs, roughly 90 at each site.

"The announcements of these plant closures will have massive impacts on the communities of Becker and Oak Park Heights," said Greg Pruszinske, Becker's city administrator and president of the Coalition of Utility Cities. "Without support from the state and other stakeholders, the massive loss of tax base and jobs will be borne by our local residents and businesses."

Several clean energy and environmental groups lauded Xcel's plans to retire the coal plants, including the Minnesota Center for Environmental Advocacy and the Sierra Club.

"Today's proposal from Xcel Energy to accelerate its transition from coal to clean renewable solutions like wind and solar is a landmark step for the company," said Michael Noble, executive director of St. Paul-based clean energy research and advocacy group Fresh Energy.

Annie Levenson-Falk, executive director of the rate payer watchdog group Citizens Utility Board, praised Xcel for its clean energy goals while so far keeping electricity affordable. However, she noted that the "devil is in the details," and those details won't be released in depth until Xcel's resource plan runs through the regulatory process.

Xcel is "still pretty vague on what these decisions mean for consumers," Levenson-Falk said.

The company's long-term resource plan is expected to be filed in early July with the Minnesota Public Utilities Commission.

Currently, Xcel gets about 30% of its power in the Upper Midwest — primarily Minnesota, but also the Dakotas and western Wisconsin — from coal and another 29% from nuclear. Wind accounts for 18%; natural gas 12%, solar 1% and other renewables, primarily hydro, 10%.

Xcel is in the midst of building several new wind farms, which together will add 1,850 megawatts of capacity — when the wind is blowing — to its system. (A megawatt is 1 million watts.) Xcel's latest resource plan doesn't call for any new wind projects in the next five years, other than the replacement of older wind farms.

As for nuclear, Xcel plans to petition federal and state regulators to extend the life of its Monticello plant, which is currently scheduled to retire in 2030. The company will essentially ask the U.S. Nuclear Regulatory Commission (NRC) to re-license Monticello for another 10 years, with an option for 10 more years after that, Xcel executives said.

"That 10-year option gives us the opportunity to look at other technologies," said Chris Clark, president of Xcel's Minnesota operations. "There is a lot of innovation and change going on in the industry."

Xcel's other two nuclear generators, both at Prairie Island near Red Wing, are currently licensed through 2033 and 2034. The company's current plan doesn't call for a license extension for either. Nuclear power is a critical source of carbon-free energy, though its age-old problem — how to store highly radioactive waste — has yet to be resolved.

The Monticello and Prairie Island nuclear generators were built in the early 1970s and re-licensed by the NRC for another 20 years of operation in the early 2010s. Since then, Xcel has sunk at least $1.5 billion into Monticello and Prairie Island for upgrades and improvements.

However, Fowke said he does not think extending the life of Monticello another 10 years "will be nearly as expensive." The company won't need to make the same level of capital improvements, he said.

Fowke and Clark said they expect additional expenses related to Xcel's resource plans — including new solar projects — to grow no faster than the rate of inflation. "You can't have your product become too expensive, and god forbid, you can't have it become unreliable," Fowke said.

With grid reliability, Xcel has to balance the variable energy production capacity of wind and solar with the near constant power generation of nuclear and coal plants.

Xcel plans to add 3,000 megawatts of new solar capacity on its system, mostly from the mid-2020s through 2030. Currently, Xcel has about 810 megawatts of solar capacity under its wing, including close to 550 megawatts through Minnesota's community solar garden program.

With that state-mandated program, independent power producers develop small solar farms — none have been more than 5 megawatts. The plants are geared toward residents, businesses and governments that do not want to set up their own solar arrays. Xcel must buy the power and administer the solar garden program.

Xcel expects around 200 more megawatts of solar-garden power to be added within the next few years. But most of Xcel's planned new solar-power generation would come from large "utility-scale" projects. Currently, Xcel receives about 260 megawatts of power from three utility-scale projects.

The company has a surplus of power generation in the Upper Midwest, which will likely continue for a few years. Much of Xcel's new solar power would start coming online as the company's coal-fired plants close in the mid-to-late 2020s.

Xcel also plans to build a large 785-megawatt natural gas-fired power plant in Becker in the mid-2020s to replace some of the coal generation that will be lost. Natural gas emits about half of the greenhouses gases that coal-burning plants do.

Xcel announced the gas project a few years ago in tandem with its decision to retire its wholly owned Sherco 1 and 2 generators, which each can produce 680 megawatts of power. Sherco 3, at 876 megawatts, is the state's single largest electricity generator.

Xcel owns 59% of Sherco 3; the rest is owned by the Southern Minnesota Municipal Power Agency. Fowke said Xcel is in talks with Southern Minnesota and thinks the agency will support the move.

"We think we are very much headed in the same direction" as Xcel, said Chris Schoenherr, head of external affairs for Southern Minnesota, which supplies power to 18 municipally owned utilities.

Mike Hughlett • 612-673-7003