Dive Brief:
- Xcel Energy on Tuesday announced plans to eliminate carbon emissions from its power plants by 2050, making it what company officials call the first major multi-state U.S. utility with a commitment to completely phase out the planet-warming pollutant.
- Xcel will reduce carbon emissions 80% from 2005 levels by 2030 on its way to the goal, adding renewable energy and retiring fossil fuel generators while continuing the operation of its Monticello and Prairie Island nuclear plants.
- The announcement comes as multiple U.S. utilities make moves away from coal and toward renewable energy. Analysts expect 2018 to be a record year for U.S. coal plant retirements and the lowest year for coal consumption by the power sector since 1979.
Dive Insight:
Xcel's announcement highlights how the increasing competitiveness of renewable energy is facilitating bolder utility climate goals, allowing companies to cost-effectively replace coal generators with wind, solar and batteries.
While Xcel is the first large utility to commit to eliminating carbon pollution, a number of smaller, municipally-owned power providers have pledged to move to 100% renewables alongside local policy goals. And the CEO of Southern Co., another large utility, has said his company will be "low to no carbon" by 2050.
In Xcel's case, the utility has steadily been drawing down coal generation for years and replacing it with wind under its "steel for fuel" strategy. In August, it received approval from Colorado regulators to retire 660 MW of coal capacity a decade earlier than planned.
Last year, CEO Ben Fowke told Utility Dive the motivation behind the strategy was to save money for its customers.
"We're looking at [prices] in the low teens to low 20s [in dollars/MWh] — not starting prices, but levelized across the 25-year life of the project," he said. "That beats gas, even at today's prices."
Energy economists say examples like that are indicative of declining prices for renewable energy that today can challenge not just new fossil fuel generation, but also undercut the operating costs of existing coal plants.
Last month, investment bank Lazard reported that the cost for U.S. onshore wind averages between $26/MWh and $56/MWh without subsidies, while utility-scale solar averages between $36/MWh and $44/MWh. That challenges the average cost for existing coal plants, which the bank pegs between $27/MWh and $45/MWh.
The trend of renewables undercutting coal generation is spreading beyond Xcel's windy service area in the Great Plains. In October, the Northern Indiana Public Service Co. announced plans to eliminate its coal generation by 2028 and replace it largely with renewables, saving customers an estimated $4 billion.
But Xcel doesn't expect wind, solar and batteries to get it all the way to its clean energy goal. While the utility expects existing technologies can help it reach its 80% emission reduction goal by 2030, "achieving the long-term vision of zero-carbon electricity requires technologies that are not cost effective or commercially available today," officials said in a statement.
