Xcel Energy announced Monday it plans to close its two remaining coal power plants in the Upper Midwest a decade earlier than scheduled, putting the utility on pace to be coal-free in the region by 2030.
The company also announced that it intends to keep its nuclear power plant in Monticello, Minn., running until at least 2040 — 10 years beyond the expiration of its current license — while it expands wind and solar energy generation.
Under Xcel’s proposal, the Allen S. King coal-fired power plant in Oak Park Heights, Minn., will close in 2028. Sherco 3, the company’s remaining Upper Midwest coal-fired generator, located in Becker, Minn., will close in 2030, a decade ahead of schedule. Xcel had already planned to retire Sherco’s other two coal units in 2023 and 2026 and build a natural gas plant on the Sherco site.
Xcel, Minnesota’s largest utility company, said it will submit its plan to the Minnesota Public Utilities Commission in July. In Minnesota, utilities are required to file a resource plan every few years, outlining the different sources of energy they need to serve their customers for the next 15 years.
“We’re showing how we can execute on our plans to achieve an 80 percent carbon reduction by 2030, which is an important milestone to our ultimate goal of 100 percent carbon-free electricity by 2050,” said Ben Fowke, Xcel’s CEO.
The accelerated timeline for retiring Xcel’s two coal-powered plants comes after the company reached an agreement with environmental and labor groups on its planned purchase of the Southern Power energy company’s Mankato Energy Center natural gas plant.
In comments to the Minnesota Public Utilities Commission, which regulates the state’s utility companies, the Sierra Club objected to Xcel’s purchase of the plant, saying it would cement the company’s reliance on burning fossil fuels well into the future. Now that Xcel has committed to retiring its coal-fired plants earlier than expected, the Sierra Club says it will withdraw comments, so the sale can move forward.
The complicated move toward a carbon-free future
Xcel’s decision to retire its coal-powered plants early is “a really big deal,” said Allen Gleckner, senior director of regulatory affairs and energy markets at the nonprofit clean energy group Fresh Energy. “These are the largest greenhouse gas, carbon-emitting sources on Xcel’s system.”
But environmental groups stopped short of endorsing Xcel’s broader energy plan, which includes extending the life of the Monticello nuclear plant and continuing to rely on natural gas power plants.
“We should instead be investing in clean, renewable energy,” said Jessica Tritsch, senior campaign representative with the Sierra Club’s Beyond Coal campaign.
Tritsch said dealing with nuclear waste is expensive and puts Minnesotans at risk. And while burning natural gas emits less carbon dioxide than coal, the process of extracting gas results in significant emissions of methane, another greenhouse gas, she said.
Xcel’s latest plans fit with the utility’s announcement late last year to eliminate carbon emissions by 2050. Some Minnesota policy makers want to require all utilities to produce electricity from carbon-free sources by 2050, but it’s looking unlikely that will happen at the Legislature this year.
Federal and state regulators would need to approve Xcel’s proposal to extend the Monticello nuclear plant’s operating license. Xcel operates one other nuclear plant in Minnesota — the two-unit Prairie Island plant near Red Wing — whose licenses are set to expire in 2033 and 2034.
Meanwhile, Xcel also committed in the agreement with environmental groups to add at least 3,000 megawatts of solar by 2030 and boost energy efficiency. The plan also calls for adding 1,850 megawatts of wind — the company’s largest-ever wind expansion — by 2022.
Xcel CEO Fowke said the changes would not lead to significantly higher customer utility bills.
“We think we can do this at or below the cost of inflation,” Fowke told reporters in a Monday morning phone call. “It’s not going to be free, but it’s going to be inexpensive and importantly, it compares very well to other alternative plans.”