Dive Brief:

• Xcel Energy estimates it has reduced carbon emissions 50% below 2005 levels in 2020, and is on track to meet its 2030 target of reducing carbon emissions 80% in the next decade, based on its upcoming integrated resource plans (IRPs).

• Utility executives touted the company's recent successful renewable energy investments in Minnesota, during its Q4 earnings call on Thursday. They also hinted that its Colorado IRP would include heavy investments in transmission and renewables, as well as action on its remaining coal plants in the state, likely looking similar to the company's plans in Minnesota.

• Xcel CEO Ben Fowke also expressed skepticism about President Joe Biden's goal of bringing the grid to 100% carbon-free power by 2035 — "2035 is like tomorrow in utility-land as far as technologies go," he said. "Honestly, I think it is a very much of a stretch goal based upon the way I see the horizon in front of us." 

Dive Insight:

Xcel is one of a number of investor-owned utilities with a large footprint to have a goal of generating all its power from 100% carbon-free energy by mid-century. Recently, Minnesota Gov. Tim Walz called on his state to instead aim to have a carbon-free power grid by 2040, which Fowke said was "possible," though he felt the Biden administration's goal was less feasible.

"That would mean that those technologies that we refer to, whether it is the next-generation nuclear, whether it is the development of hydrogen, whether it is carbon capture working economically, whether it is long-term storage, they have to come into the money much sooner than I think they will," he said. "But you have heard me say before, I never bet against technology. So more to come on that."

In Minnesota, the company is proposing to acquire a 120 MW wind farm power purchase agreement for $210 million, and its $750 million proposal to repower older wind farms with newer, more efficient technologies was approved by the Minnesota Public Utilities Commission in December.

In total, the company completed six wind projects in 2020, representing nearly 1,500 MW of capacity. Another 800 MW of wind projects are under construction and expected to become operational in 2021.

The utility plans to file its solar plans with Minnesota regulators later this year, which would have the utility develop 460 MW of solar near its Sherco coal plant — retiring in 2030 — to take advantage of existing transmission near the plant.

Xcel executives were not able to get into specifics on its upcoming IRP in Colorado, but said the plan will include transmission expansion, to bring more load from remote-located renewables into the Denver metropolitan area. The utility will also propose a plan for its remaining coal plants in the state, as well as adding more renewables, to put the utility on track to reduce its carbon footprint 80% by 2030.

"We need to enable several gigawatts of renewables. And if you think about that, it is enabling low-cost universal scale solar and wind to bring it to our load centers in Denver," said Fowke, adding there is "significant investment opportunity on the transmission side."

"Our Minnesota resource plan is a good proxy, where we have several gigawatts of renewables in our preferred plant through 2030," he said. "So it will look and feel a lot like that."

Xcel plans to exit coal entirely in Minnesota by 2030. In Colorado, the utility announced it would retire both units of its Hayden plant by 2027 and 2028, but has not yet announced its plans to retire its 505 MW Pawnee plant or its 750 MW Comanche 3 unit.

Utility executives also said they will continue to be bullish on electric vehicle infrastructure buildouts, investing $500 million in charging stations and distribution system infrastructure over the next five years, and closer to $1.5-2 billion over the next decade, according to Robert Frenzel, Xcel president and chief operating officer.

Car companies are starting to get more on board too, he said, adding that the CEO at Ford told him he agrees with the utility sector's vision of EV penetration being an extension of the grid. 

"In the past, I have been told that the car manufacturers are a little worried about using batteries in that matter. Now we are [a] ways away from that," he said. "But I mean, when you look down a road, you can certainly see a future that incorporates EVs into the grid."

Xcel delivered an earnings per share of $2.79 in 2020, compared with $2.64 per share in 2019, earning a total shareholder return of over 7.8%. That constituted a total earnings of $1.47 billion in 2020, compared to $1.37 billion in 2019.