Not too long ago, when an electric utility talked about fuel diversity, “our world used to be much simpler,” Xcel Energy (NYSE:XEL) Managing Director of Resource Planning Kurt Haeger told the TransForum West gathering May 5 in Denver.
“We used to talk about two things: Coal and natural gas … that was about it,” Haeger told the conference sponsored by PennWell’s TransmissionHub news service.
Today power companies face the prospect of complying with carbon dioxide (CO2) reductions mandated by the Environmental Protection Agency (EPA)’s proposed Clean Power Plan.
“We are entering into a period that is very unstable,” Haeger said. Companies might go with “shorter term” strategies until they see if carbon regulation and other key environmental standards survive court challenges, he added.
In addition to traditional central station power generation from coal, gas and nuclear power, planners must also consider issues like wind, rooftop solar, battery storage and microgrids, the Xcel Energy official said.
The challenge today is to balance the need for less reliance on coal, and its CO2 emissions, while still maintaining reliability at an affordable cost. This is further complicated by flat power demand – along with the fact that huge chunks of the current baseload fleet could retire within 20 years, Haeger said.
When it comes to portfolio planning, every utility has its own unique circumstances, Haeger said.
Some states require utilities to calculate a specific CO2 price in future resource considerations, while other states don’t want any consideration of potential CO2 costs at all. Some states might restrict the hours of operation for coal units due to CO2 considerations, Haeger said.
Xcel Energy is lucky because “we are in the wind belt,” Haeger said.
“We are the No. 1 wind provider” in the nation for many years, Haeger said. Xcel Energy and its operating utilities could hit 7,000 MW of wind generation by the end of this year.
Xcel Energy has gone from seeing wind prices in the neighborhood of $60/MWh a few years ago to more like $30/MWh now in some areas, Haeger said.
In some of the company’s service areas, “you can bring in wind energy almost as cheaply as coal energy” and that’s a real game changer, Haeger said.
Xcel Energy is currently seeking to deploy 187 MW of solar energy in Minnesota: “A state that isn’t considered very sunny,” Haeger said.
Haeger has been with Xcel Energy companies for more than 30 years. He has chaired a number of industry groups and has frequently testified in both state regulatory proceedings and in FERC hearings.