As Xcel moves toward coal-free, will natural gas remain part of energy mix?

When Xcel Energy announced last year that it plans to stop burning coal in Minnesota by 2030, environmental groups applauded the company's effort to curb greenhouse gas emissions linked to climate change.

But one part of Xcel's plan is being met with less enthusiasm: It’s proposing to replace a coal-fired power plant in the central Minnesota town of Becker with a brand-new plant that would burn natural gas to generate electricity.

Xcel says it needs natural gas as part of its transition to carbon-free electricity. But some advocacy groups say building a new fossil fuel plant is unnecessary — and may be unwise.

The proposed gas plant is part of a resource plan Xcel Energy submitted in July to the state Public Utilities Commission. In Minnesota, utilities are required to file a resource plan every few years, outlining the different energy sources they need to serve their customers for the next 15 years. The PUC must approve the plan.

Xcel’s plan calls for retiring its remaining two coal-fired power plants in the Upper Midwest — both in Minnesota — by 2030, adding new solar and wind to its energy mix and keeping its nuclear plant in Monticello, Minn., operating at least until 2040.

Xcel received special authority from the state Legislature three years ago to build the natural gas plant in Becker to replace the coal-fired plant it’s planning to close there, bypassing the traditional route of getting approval from state regulators.

But Xcel isn’t required to build the new plant. And the PUC could require that it be smaller than the 786-megawatt size Xcel proposed.

In the initial public reaction to the plan, the proposed natural gas plant received some of the sharpest criticism.

"We would be one of the first to sort of recognize that Xcel has been making really bold commitments about reducing their carbon emissions, and they're obviously very serious about those goals,” said Kevin Lee, director of the Minnesota Center for Environmental Advocacy’s Climate and Energy Program. But he added, “To us, a large investment in gas is one of the most obvious ways in which we think that they've missed the mark."

Lee and other environmentalists are pushing back against utilities continuing to rely on natural gas as they work to reduce carbon emissions from power plants.

Using carbon to get to zero carbon

As the cost of wind and solar energy drops and concerns about climate change grow, more U.S. utilities are moving away from burning coal. But many, like Xcel, are also continuing to rely on another fossil fuel — natural gas — during the transition.

"We appreciate the desire that people have for us to move away from fossil [fuels] as fast as we can,” said Chris Clark, president of Xcel Energy in Minnesota and the Dakotas.

Clark said the company is eager to add more solar and wind energy, but also believes it needs the natural gas plant in Becker to provide reliable power.

"We want to make sure if we have a day where the wind is not there and we don't have a good solar resource … we have the energy we need to keep our businesses running and to keep our homes comfortable — and to keep the lights on for our customers,” Clark said.

Clean energy advocates like Lee say using natural gas as a bridge to a carbon-free future may have been a plausible approach 10 or 20 years ago, when the development of renewable energy was just ramping up. But with the price of solar and wind energy falling, Lee said, it’s no longer valid.

"We don't feel like there's any reliability concerns,” he said. “We're seeing countries around the world using way more wind and solar than we are, and doing it safely and reliably."

Emissions risks and financial ones?

A new, efficient natural gas plant emits about 50 percent less carbon dioxide than a typical coal plant. But climate advocates say that’s not the whole story.

They argue that regulators should consider the impact of the entire life cycle of natural gas — from drilling and extraction through hydraulic fracturing, known as fracking, to transportation through pipelines. The process that’s used to produce natural gas releases methane, a potent greenhouse gas.

Climate change aside, some consumer advocates are concerned that the cost of building a new gas plant — likely in the hundreds of millions of dollars — could be a financial liability for Xcel customers in the future, especially if the price of the fuel climbs.

"We're concerned that natural gas plants that are being built today are very likely to be too expensive to make sense to operate before they're even paid off,” said Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, which advocates on behalf of electric ratepayers.

Levenson-Falk pointed to a recent report from the nonprofit Rocky Mountain Institute that found that 90 percent of the gas plants being built today will be uneconomical by 2035 — around the time Xcel’s proposed Becker plant would likely be in operation. The company’s plans say it would build the new natural gas plant in the mid-2020s.

"It can be a really bad situation for ratepayers because then you have millions — or even hundreds of millions — of dollars that need to be paid off on an asset you don't want to be using because it's too expensive,” Levenson-Falk said.

Local impact

Watching the debate closely are the leaders of Becker, a city in Sherburne County about 45 miles northwest of the Twin Cities. The community of about 5,000 is poised to lose about 300 jobs and a substantial portion of its tax base when Xcel closes its Sherco coal plant.

Becker officials support the proposed natural gas plant, although its size and the number of people it would employ is still undetermined, said City Administrator Greg Pruszinske.

“From our community standpoint, we certainly support the capital investment,” he said. “We think that’s a big part of what that gas plant could do for us.”

A new gas plant also could benefit neighboring businesses like Liberty Paper, which currently receives steam from Sherco, Pruszinske said.

Labor union members also have voiced support for the new natural gas plant, which would generate construction jobs.

Next steps

Xcel’s Chris Clark said the company is open to innovations that could help it move more quickly away from fossil fuels entirely, such as producing hydrogen for fuel or using batteries to store electricity in times when solar or wind aren’t available.

Those ideas aren't quite ready to adopt today, Clark said, but could help Xcel achieve its broader goal of producing 100 percent carbon-free electricity by 2050.

"If there is a way for us to come up with something that would avoid the plant completely, we're open to it,” he said. “We have no problem going faster. We just never want to sacrifice safety, reliability or affordability."

The approval process for Xcel’s resource plan has been delayed as state regulators seek more information. It also was complicated by the Public Utilities Commission first rejecting, then clearing the way for Xcel’s $650 million purchase of Southern Power’s natural gas plant in Mankato.

Xcel expects to submit a revised resource plan this spring, Clark said. The public comment period has been extended until Aug. 3.

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