Xcel Energy proposes alternate option for industry-leading carbon reductions

Xcel Energy announced today it is proposing an alternate energy plan (also known as an integrated resource plan) for the Upper Midwest that enhances the company’s commitment to dramatic reductions in carbon emissions from the electricity it provides customers while ensuring continued reliability and affordability. The plan would reduce carbon emissions more than 85% by 2030, compared to 2005 levels.

The new proposal is an alternate option to the Upper Midwest Energy Plan proposed to regulators last year, and it delivers even greater carbon reductions than our original plan while still providing reliable and affordable energy for our customers. Unlike the original Upper Midwest Energy Plan, the alternate proposal does not include the natural gas-fired combined cycle plant at the Sherco site in Becker, Minn., and instead would include four smaller natural gas facilities in separate locations throughout the region. Xcel Energy projects that these facilities would operate significantly fewer hours per year than the proposed Sherco combined cycle plant and have far fewer carbon emissions but are necessary to ensure system reliability when wind and solar resources are not available.

The alternate plan would add significant amounts of additional wind and solar energy. Like the original plan, the new alternate proposal would close all coal plants in the region by 2030 and continue operating the company’s carbon-free Monticello nuclear plant until at least 2040. The new plan also adds 250 megawatts of energy storage to the grid. The alternate plan has a lower projected cost than the original plan.  

“Our new plan that we’ve proposed today meets the shared goals of our company, customers, communities, and stakeholders to lead the clean energy transition by affordably reducing carbon emissions while maintaining reliable electricity for our region,” said Chris Clark, president, Xcel Energy-Minnesota, North Dakota, South Dakota. “As we continue driving toward our 100% carbon-free vision, we’re taking advantage of low-cost renewable energy, new technology and new ways of ensuring reliability for our region to deliver industry-leading carbon reductions.”

Years of engagement provides options for consideration

The alternate option was developed following significant feedback from stakeholders, as well as additional analysis on the future of the region’s energy grid. The new option relies on renewable generation, energy storage and smaller natural gas facilities to maintain reliability rather than the Sherco combined cycle plant proposed in the original plan.

One new natural gas combustion turbine would be located in Lyon County, Minn., and another would be located near Fargo, N.D. The company would also repower two other natural gas facilities. Notably, the combustion turbines are planned to be built with technology that can be used to maintain grid stability while not burning fuel and will be designed to enable the use of hydrogen in the future. These plants will serve an important role in ensuring the reliability and stability of our electric system while advancing the clean energy transition, and collectively, these plants are lower cost than building the combined cycle plant and associated infrastructure at Sherco.

“Our commitment to the Becker community and central Minnesota will not change,” said Clark. “We’ve partnered with them to bring new jobs and capital investments to the community to replace the retiring coal plants, and we’ll continue to develop projects that keep this region vibrant and growing. We’ll also work with our employees to ensure a smooth transition over the next decade that will bring opportunities for training and new positions throughout the company.”

Alternate plan details

The alternate plan would reduce carbon emissions 85% by 2030, compared to 80% reduction in the company’s original proposal. The alternate plan includes over 2,600 megawatts of wind, 3,100 megawatts of solar and 250 megawatts of new energy storage. Additionally, it would save customers energy by using energy efficiency programs to save approximately 800,000 megawatt hours of electricity each year, and more than 400  megawatts of demand response programs that would reduce the amount of energy our customers need, especially at peak times. The company projects that the plan would save customers approximately $600 million compared to the original plan.

A Commission decision on the plan is expected in late 2021.