Xcel Energy is asking Minnesota regulators to approve $1.4 billion in new wind and solar investments in the next 12 months and is outlining plans for electric vehicle charging, energy storage and green hydrogen production pilot programs to meet its goal to reach net-zero carbon emissions by 2050.
The new wind and solar plans announced Thursday are additions to a $22.6 billion, five-year capital investment plan from the multistate utility. They include a $750 million investment in repowering four wind projects to add a collective 650 megawatts of generation capacity and $650 million to install 450 MW of solar near one of the coal power plants of a Minnesota state fleet it has pledged to retire by 2030.
Xcel filed its wind plan with the Minnesota Public Utilities Commission in September and expects approval by year’s end, CEO Ben Fowke said during the company’s third-quarter 2020 earnings conference call. If approved, the investments are expected to save customers more than $160 million over the life of the assets, he said.
The solar project plan will be filed in early 2021, with a decision expected in the middle of next year. “We're confident the commission will see the customer benefits of these projects,” Fowke said.
These incremental investments are “associated with the Minnesota relief and recovery proposal” that Xcel has developed, Fowke said. This plan is in response to a May request from the state regulator asking utilities to find ways to assist in economic recovery from the COVID-19 pandemic.
But they’re also part of a broader Upper Midwest Energy Plan that includes increasing its wind portfolio by about 3,700 MW, or about 55 percent, by 2022, and adding about 3,000 MW of solar to its current 750 MW by 2030. Xcel expects regulators to approve this plan, which also includes coal-closure commitments and extending its nuclear power plant operations through at least 2040, by the end of this year.
Xcel made waves in late 2018 by setting its own net-zero carbon plans in advance of state mandates. The plan calls for cutting carbon emissions by 80 percent compared to 2005 levels by 2030, up from a 35 percent reduction already achieved by 2018, and eliminating the final 20 percent of its net emissions by midcentury. Since then, its zero-carbon pledge has been matched by similar commitments from utilities including Duke Energy, Dominion Energy, Southern Company, Arizona Public Service, NRG, PSEG, Consumers Energy, Alliant Energy, Entergy and Ameren.
Both Minnesota and Colorado, which contain the majority of Xcel’s 3.6 million electric and 2 million natural gas customers spread across eight states, are moving toward their own clean-energy and zero-carbon mandates. In Colorado, Xcel subsidiary Public Service Company of Colorado plans by 2026 to retire 660 MW of coal-fired power units, about one-third of its remaining coal fleet, and replace it with 1,131 MW of wind, 707 MW of solar and 275 MW of battery storage, boosting its renewables portfolio to 55 percent.
In Minnesota, Gov. Tim Walz is asking lawmakers to take up a plan to reach zero-carbon electricity by 2050, although the proposal's future will likely depend on which political party controls the state legislature after November’s election.
EVs, green hydrogen and energy storage
Fowke also outlined ongoing efforts to support its goal of enabling 1.5 million EVs by 2030, or about 20 percent of all vehicles in its service territory today. Those include an EV subscription plan that covers the cost of residential charging stations in exchange for long-term payments through off-peak monthly rates, “which can save customers money and make more efficient use of the electric grid,” he said.
Utilities across the country are working with regulators on various EV charging offerings, ranging from incentive programs to allowing utilities to invest in the infrastructure needed to increase grid capacity to serve chargers — or in rarer cases, to own the chargers themselves.
“On the residential side, or multi-dwelling, things like that, I think we're very well positioned to own those charging stations,” Fowke said. Building a public fast-charging station network to reduce EV drivers' range anxiety will likely require public-private partnerships, he said.
Like other utilities pledging 100 percent carbon reduction by midcentury, Xcel is struggling to identify cost-effective technologies “needed to get that last 20 percent out,” Fowke said. The fundamental challenge is finding carbon-free alternatives to burning fossil natural gas in power plants that can meet peaks in grid demand and supply power through seasons when wind and solar, even backed by lithium-ion batteries, aren’t sufficient.
One option could be green hydrogen, generated from zero-carbon electricity via electrolysis, that could be stored for use to power turbines. Xcel Energy was recently awarded a $10 million Department of Energy grant to work with DOE’s Idaho National Laboratory to test a high-temperature electrolysis process that could be 30 percent more efficient than current methods, he said.
As for other forms of energy storage, Xcel in Colorado has already contracted for hundreds of megawatts of lithium-ion batteries alongside wind and solar power projects. Future resource planning proposals in Minnesota and Colorado will lay out further storage plans for the utility, Fowke said.
Existing battery technologies are “definitely part of these peaking resources,” he said. But at the same time, he added, “batteries can only do so much.”
“We're going to need perhaps some form of long-term storage to address those seasonal variations,” he said. Pumped hydro storage could be a potential resource in mountainous Colorado, he noted, and “hydrogen is perhaps that long-term storage” as well.