The Minnesota Public Utilities Commission will look at its Oct. 6 meeting whether to approve the latest Integrated Resource Plan (IRP) of Northern States Power, a unit of Xcel Energy (NYSE: XEL), with thatn plan calling for a sharp reduction of coal-fired capacity and a heavy dose of new gas and renewables.
Commission staff on Sept. 29 filed a briefing memo ahead of the Oct. 6 session.
Xcel’s proposed expansion plan for 2016-2030 reflects what it believes will achieve the company’s financial objectives as an investor-owned utility, minimize costs for its multi-jurisdictional system, and satisfy the statutory requirements of each state in that system. Some key provisions of Xcel’s IRP include:
- Adding 800 MW of wind and 400 MW of utility-scale solar by 2020;
- Adding 1,000 MW of wind and 1,000 MW of large solar in the 2020-2030 timeframe;
- Retiring the coal-fired Sherburne County (Sherco) Unit 2 in 2023 and Sherco Unit 1 in 2026;
- Replacing the Sherco units with a 780-MW natural gas combined cycle unit at the Sherco site in Becker, Minnesota, by 2026;
- Adding a 230-MW natural gas combustion turbine in Fargo, North Dakota, in 2025; and
- Operating its Prairie Island and Monticello nuclear plants through the early 2030s (the end of the operating licenses for its nuclear facilities).
These actions, according to Xcel, will reduce the company’s carbon dioxide (CO2) emissions by 60% from 2005 levels by 2030, as well as result in 63% of the Northern States Power (NSP) system energy being carbon-free by 2030.
Xcel Energy’s IRP process began with its initial petition filed on Jan. 2, 2015. The procedural schedule was later modified to account for: the approval of Xcel’s petition for 187 MW of utility-scale solar; and Xcel’s competitive resource acquisition process, which resulted in a company-owned Black Dog 6 gas unit and purchase power agreements (PPA) for Geronimo’s Aurora solar project and Calpine’s gas-fired Mankato Energy Center II expansion.
Xcel expects to have surplus capacity until the mid 2020s. However, in Xcel’s proposed expansion plan—referred to as its “Current Preferred Plan”—this capacity surplus is erased by a confluence of three main factors:
- the proposed retirement of 1,400 MW of coal capacity from Sherco units 1 and 2;
- the retirement of roughly 850 MW of aging, Xcel-owned peaking plants; and
- the expiration of over 2,000 MW of existing power purchase agreements (PPAs).
Xcel’s net capacity position assumes about 40-50 MW per year of installed (nameplate) capacity from its Community Solar Gardens (CSG). Thus, its short-term term position would be even higher under a more aggressive CSG program.
In the five-year action plan, Xcel proposed to add, through a combination of ownership and PPA structures, 800 MW of new wind and 200 MW of new large solar in 2018, to be followed by another 200 MW of large solar in 2020. This does not include Xcel’s Community Solar Gardens, which, as explained, were an embedded assumption in the modeling.
In its Aug. 12, 2016 reply comments, Xcel alluded to procuring at least 1,000 MW and possibly as much as 1,500 MW of wind resources in the pre-2020 timeframe. On Sept. 22, 2016, Xcel issued a request for proposals (RFP) seeking up to 1,500 MW of nameplate wind capacity through PPA or build-own-transfer agreements.
Commission staff noted that Xcel issued its wind RFP two weeks before the commission hearing, knowing its IRP was scheduled for the Oct. 6 hearing. The wind proposals are due Oct. 25, 2016.