Xcel Energy's plans: 5 things to watch

Updated: 5 p.m. | Posted: 4 a.m.

Xcel Energy, Minnesota's largest utility, announced earlier this year its plans to retire two coal plants early and extend the life of a nuclear plant. It's part of the utility's goal to generate all electricity from carbon-free sources by 2050 to help address climate change.

On Monday, Xcel filed its formal proposal — called an Integrated Resource Plan — with the Minnesota Public Utilities Commission, kicking off a public process in which electricity customers, environmentalists and others have a chance to weigh in.

Here are five things to watch as the process moves forward:

1) Retiring coal plants

Xcel's Allen S. King coal-fired power plant in Oak Park Heights, Minn., is slated to close in 2028. The company's remaining coal-fired generator in the Upper Midwest, the Sherburne County Generating Station in Becker — also known as Sherco — will close in 2030, a decade ahead of schedule.

Xcel had already planned to retire two of Sherco's three coal units in 2023 and 2026 and build a natural gas plant on the Sherco site.

The big questions here will revolve around how Xcel plans to ensure reliable electricity service without the coal plants. And locally, what will the company do for employees and communities that have relied on the plants for years for tax revenue and other benefits?

What the plans say: Xcel's resource plan emphasizes that nuclear and natural gas power plants will play key roles in replacing the reliable power that its coal plants are now generating.

The utility's filings also refer to adding another "dispatchable" resource to the mix — a resource that can respond to increased electricity demand — but doesn't yet know what that will be. Batteries are one possibility, especially if the costs keep going down.

As for supporting the communities where the coal plants are located, Xcel said Becker will benefit from a new natural gas power plant, a new metal recycling facility that is relocating with Xcel's help and a possible new Google data center.

Xcel said it is also participating in a community impact study looking at host cities where coal plants are being retired.

2) Nuclear energy extension

Xcel has said it wants to extend the license for its Monticello nuclear plant in Monticello, Minn., by 10 years — to 2040.

Electricity customers will want to know if nuclear energy will cost more than other carbon-free sources. They will also ask questions about how much more radioactive waste would be generated and stored on site.

Many wonder if Xcel will also want to extend the licenses at its other nuclear power plant, on Prairie Island, but that question likely won't be answered in this resource plan.

What the plans say: Xcel's filing indicates that both the Monticello and Prairie Island nuclear plants have become more efficient, and that recent investments in Monticello mean the plant is ready to operate at least another 10 years.

Still, regulatory hurdles remain. Xcel will have to seek a license extension from the federal Nuclear Regulatory Commission. It will also need a Certificate of Need from the Minnesota Public Utilities Commission to store more radioactive waste at the plant.

Xcel said its modeling shows that extending the life of the Prairie Island plant would also be cost-effective, but utility officials acknowledge that conditions could change by the time its licenses come up for renewal. Because of that, officials want to put off making any decisions about that plant until Xcel's next resource plan.

3) Solar energy investment

Xcel has said it will add at least 3,000 megawatts of solar by 2030. But will need to detail how that new solar energy would be deployed: Would it mostly come from large, utility-scale solar farms? Community or rooftop solar?

Some groups are also interested in how Xcel plans to develop projects, and whether the company will tap Minnesota workers to build them.

What the plans say: Xcel says in its plans that the 3,000 megawatts of additional solar will come from utility-scale projects.

Chris Clark, Xcel's Upper Midwest president, said in an interview that there will be room for community and rooftop solar to play a role in the mix, but he said large-scale solar is more cost-effective.

The company tried unsuccessfully this year to get the Legislature to modify the state's community solar program.

4) Energy efficiency

Xcel has said it will save roughly 700 gigawatt-hours of electricity annually through energy efficiency efforts.

Over the years, that savings could be as much as a power plant, meaning energy efficiency is helping Xcel be in a position to retire power plants. The resource plan will include some details about how the utility would achieve such high levels of efficiency and what role consumers will play.

What the plans say: Xcel anticipates continued electricity savings from transitions to LED lighting, smart thermostats and more efficient appliances.

The utility is also working with its biggest electricity customers, such as manufacturing facilities, to find efficiencies. Clark said advanced technology and better data collection will lead to more opportunities for achieving energy efficiency.

5) Natural gas

How much natural gas-fired power Xcel will rely on over the next 15 years will be a point of contention between the utility and environmental groups.

Natural gas is a fossil fuel, and some environmentalists say it's not much better than coal. But Xcel has said that, in the near-term, natural gas will be a necessary part of its energy mix in order to maintain reliability for its customers.

The company is planning to build a new natural gas plant in Becker, on the site of its retiring Sherco coal power plant, and Xcel is also moving toward purchasing a natural gas plant in Mankato.

What the plans say: Xcel says it will build its new, 800-megawatt natural gas power plant in Becker in the mid-2020s. The Mankato Energy Center, which Xcel wants to purchase, would add 760 megawatts to its system.

The utility said natural gas is needed to ensure reliability, as it adds more wind and solar resources: Natural gas plants' production can be ramped up or ramped down, depending on the need for electricity on a given day.

Xcel argues in its plan that there won't be much of an increase in natural gas production within its system, as two smaller natural gas plants will retire in the next 15 years and Xcel is already purchasing power generated from the Mankato plant it hopes to buy.

Correction (July 1, 2019): This story has been updated to correct that Xcel's purchase of the natural gas plant in Mankato has not been finalized.