Xcel Energy plans to meet its voluntary goal of zero-carbon electricity by 2050 while maintaining reliability and affordability, the utility's leader said Tuesday.
When the company, which provides power to eight Western and Midwestern states, made that commitment in December, it acknowledged that it would rely on "technologies that are not cost-effective or commercially available today." Speaking at the Bloomberg New Energy Finance Summit in New York, Xcel Chairman, President and CEO Ben Fowke elaborated on what exactly that entails.
"Every technology has its advantages and disadvantages," he said. "We've got to be open to anything that mitigates the risk of climate change."
That seemingly unobjectionable stance — fighting carbon emissions with tools that limit carbon emissions — stakes out contested ground as a dozen states hash out their own ambitious grid decarbonization policies.
Several of them are framing policy that requires renewables exclusively. Hawaii already passed this target for 2045. Legislation proposed in Illinois would enact it there. In Colorado, where Xcel operates, Governor Jared Polis ran and won in 2018 on a 100 percent renewable platform; he nonetheless endorsed Xcel's clean energy pledge, which came out between the election and him taking office.
The primary crux of the dissent in these matters is still nuclear power, which draws opposition from various corners due to cost overruns and delays on new plants, as well as fears about radioactive waste.
Fowke disagrees with those who would eliminate this power source on the way to a carbon-free grid.
"I think nuclear plays a role in that carbon-free future," he said. "It's 20 percent of our energy mix today [and] it's just under 60 percent of [our] carbon-free energy, so if we lose that, we're going to take a step back."
That said, he noted that policymakers need to reach a long-term solution on waste and that regulatory evolution is needed to permit a new generation of reactors, which would be much smaller and possess new safety features.
A future for nuclear? Carbon capture?
Congress passed and President Donald Trump signed two laws to modernize permitting and development for advanced reactor designs in recent years, in a rare case of bipartisan energy policy agreement. So far, only NuScale Power has begun the years-long process of a federal review for its small modular reactors.
If they receive permission to operate, miniaturized reactors may avoid the fate of gigawatt-scale nuclear plants, which have a dismal record for delays and cost overruns in the U.S. The only ongoing plant construction project, Georgia's Vogtle facility, just received $3.7 billion in additional loan support from the Trump administration.
Small modular reactors compare favorably to their gigantic predecessors, Fowke said, because they represent "less of a capital bet for somebody like me sitting in a boardroom."
"I'm not going to bet billions on a balance sheet on one single plant," he said
Fowke noted that he's not wedded to nuclear. If carbon capture or the hydrogen economy started working in a cost-effective manner, those could serve the zero-carbon goal instead.
"Let's let the economics and the operational aspects guide us in those decisions," he said.
In the meantime, Xcel plans to cut 80 percent of its carbon emissions by 2030 by building more tried-and-true wind and solar.
Displacing fossil fuel expenses
Xcel's territory spans some prime wind resources in the middle of the continent. The company has already made waves with solicitations that pushed renewables and storage-paired plants to new record-low prices.
Xcel can do this while saving money for its customers, Fowke said, by displacing the operating expenses of fossil fuels that get passed through to ratepayers.
"If you can lower fuel more than you spend on the capital recovery for those renewables, it's a good deal," Fowke said.
Unlike fuel costs, capital investments earn profits for regulated utilities.
Pursuing cost-effective renewables development delivers other corporate benefits, like attracting "top talent," Fowke said. That's just one of the win-win scenarios he identified.
"Quite frankly, if you can do it with affordability and reliability in mind, it's a winning combination, and shareholders benefit from that," he said. "If you're seen as a leader, you typically get treated better [and] it creates better investment opportunities for you, so we're excited about it."
Those kinds of ideas got David Crane fired from NRG not too long ago, but the profitability of wind and solar development has come a long way, even since 2015. Xcel's experience will test the proposition that these resources' time has come.