Xcel to close 2 coal plants, add 3 GW solar in settlement to acquire Mankato gas plant

Dive Brief:

Xcel Minnesota reached a settlement agreement on Monday with clean energy groups that would give the utility support to complete a power purchase agreement for a 720 MW natural-gas fired facility in exchange for retiring some coal units early and adding solar.
The utility agreed to retire its Allen S. King coal plant by 2028, its Sherco unit 3 coal generator by 2030 and reduce its Sherco unit 2 to seasonal operation until its 2023 retirement. Ahead of its 2020-2034 draft preferred resource portfolio, also released Monday, the utility agreed to add at least 3,000 MW of solar power by 2030 and include at least 706.4 GWh annually of energy efficiency savings in its Minnesota resource portfolio.
Other portions of Xcel's draft preferred plan have not yet been endorsed by clean energy groups, including the utility's proposal to continue operating its 671 MW Monticello nuclear plant through 2040.

Dive Insight:

Last December, Xcel Energy committed to eliminating carbon emissions from its electricity generation by 2050. Since then, the utility's leadership has indicated an openness to nuclear generation, including advanced reactors, to help reach its goal.

"To get us to that 100% carbon free, and have reliable energy, which we all count on each and every day, you have to have something that's zero carbon that we can dispatch on command," Xcel CEO Ben Fowke told Utility Dive in February.

Although clean energy groups reached a compromise with the utility over the acquisition of the Mankato Energy Center, currently owned by Southern company, they are not yet sold on other aspects of the utility's draft resource plan.

"Our settlement doesn't commit any of these groups to supporting the full plan," Allen Gleckner, senior director of energy markets and regulatory affairs at Fresh Energy, one of the clean energy groups involved in the settlement, told Utility Dive. "We're just learning about the rest of the plan today as well. We just learned that it includes a proposal to extend a license on a nuclear unit and other elements like that."

But the coal portion of the settlement accelerates retirements by about a decade for each unit, which would put Xcel, the largest investor-owned utility in the state, on an accelerated path to operating coal-free in Minnesota. Sherco unit 2 was already set to retire by 2023, but now will only operate seasonally, representing "a significant near term carbon reduction," said Gleckner.

Other released aspects of Xcel's draft resource plan include adding 1,850 MW of wind by 2022, which, combined with the solar additions and coal plant reductions, will reduce the utility's carbon emissions 80% by 2030 in Minnesota, according to a statement from Xcel.

All of Minnesota's utilities currently still operate coal units.

In March, the state's legislature introduced a 100% carbon-free bill, which received positive feedback, but not outright support from its two largest utilities — Xcel and Minnesota Power. The bill was amended to include nuclear power and landfill burning as eligible generation resources, but faces opposition from the Republican-controlled state Senate.

Clean Grid Alliance, Fresh Energy, the Sierra Club, the Union of Concerned Scientists, Minnesota Center for Environmental Advocacy, the Center for Energy and Environment, and Laborers District Council of Minnesota and North Dakota were all parties to the settlement.

The utility's final resource plan is due to the Minnesota Public Utilities Commission July 1.