Dive Brief:

• Minnesota regulators unanimously approved Xcel Energy’s 15-year integrated resource plan (IRP) on Thursday, authorizing the utility to close two units of the state's largest coal-fired power plant and replace the capacity with a combination of renewables and natural gas generation. 

• Under the plan, Xcel would close two units totaling 1,362 MW at the Sherburne County plant, otherwise known as Sherco, in Becker. The third, 860 MW unit was added in 1987 and is 41% owned by Southern Minnesota Municipal Power Agency.

• In its IRP filed with the Minnesota Public Utilities Commission, Xcel said it plans to replace the coal-fired capacity with as much as 1,800 MW of wind power and 1,400 MW of solar by 2030. Xcel also proposed adding a 780 MW gas-fired combined cycle plant at the Sherco site by 2026 and a 230 MW gas-fired combustion turbine in Fargo, North Dakota in 2025.

Dive Insight:

With unanimous approval from the Minnesota PUC, Xcel Energy can move closer to its renewable energy and carbon targets. The traditionally coal-heavy utility has said it plans to generate 40% of its energy from renewable resources by 2030 while reducing its carbon dioxide emissions by 60%.

Under the IRP, Xcel will close the two units of the Sherco coal plant it wholly owns by 2023 and 2026. The plan calls for the capacity to be replaced with at least 1,000 MW of wind by 2019 and 650 MW of solar by 2021. The utility would also add gas capacity, building a new combined cycle turbine at the Sherco site and another plant in Fargo in 2025.

Further renewable and gas generation is slated for the 2020s, according to a PUC staff report, but could be reevaluated when Xcel files its next IRP in 2019.

A coalition of environmental groups say they approve of most of the plan, Midwest Energy News reports there has been some pushback on Xcel’s plans to add gas generation. Burning gas emits about half as much carbon as coal, but scientists say the U.S. is reaching a limit on how much gas-fired generation it can build if it wants to meet the Paris climate goals.

Natural gas will be used as a balancing fuel as Xcel adds more variable wind and solar generation, utility officials said last month, but they do not foresee it making up a significantly larger portion of their power mix. In 2015, Xcel generated 34% of its electricity in the Upper Midwest from coal, 15% from natural gas, 27% from nuclear and 24% from wind and other renewables. 

Along with the capacity additions, the IRP calls for Xcel to collect bids for 400 MW of demand response within the next year and study the technical feasibility of 1,000 MW more.

According to environmental group Fresh Energy, Xcel's next resource plan will explore scenarios for the retirement of its remaining coal and nuclear plants, including the Sherco, King, Monticello and Prairie Island facilities. That plan is due in Feb. 2019.