Thoughts on Xcel’s 2030 Resource Plan

Xcel Energy, the state’s largest electric utility, has filed their 2016-2030 Resource Plan with the Public Utilities Commission. This begins a long process of commenting and modification until their plan is approved by that body (which can take years). The Resource Plan details what trends in usage Xcel expects, and what resources (like new power plants, etc) are needed to meet that demand. The plan is important because it identifies the infrastructure investments the utility will need to make, and also the resulting environmental performance, among many other details.

I’m slowly making my way through it, both for professional and personal interest, and hope to highlight some thoughts for you, my dozens of readers.

There are a lot of things to like in the plan, the first being that Xcel is planning to meet State greenhouse gas emissions reduction goals within their own system. This is unlike the previous plan, which showed emissions increasing between 2015 and 2030. The chart below, from Appendix D, compares the two plans. (State goals include a reduction of 15 percent by 2015, 30 percent by 2025 and 80 percent by 2050)

2030 CO2 Emissions Xcel

Most of the planned reductions in carbon pollution come from the addition of renewable energy resources to their system, as the chart below shows. By 2030, Xcel plans for 35 percent of their energy portfolio to be renewables.

Sources of CO2 reductions

However, I think the plan’s assumptions about the future cost of the solar portion of those renewables is probably too high.

Xcel plans to add over 1,800 MW of utility-scale solar to their system by 2030 (up from basically zero in 2015). This is a significant increase from the “reference case”, a ten-fold increase in fact. However, this slide was presented at a public meeting at the Public Utilities Commission:

Renewable Price ForecastXcel says this in Appendix J about their assumption:

As solar technology is still not fully mature, and costs are expected to decline and conversion efficiency to improve, it was assumed that the $95/MWh price holds throughout the study period. In effect, the assumption is that fundamental cost driver improvements will offset inflation.

So the rate of decrease in solar prices will match the inflation rate? Many sources have documented the dramatic decline in solar PV prices over recent years. Lazard seems to be an oft-cited source, and their 2014 Levelized Cost of Energy Analysis shows the price of energy from solar has dropped 78% since 2009. According to, the cumulative rate of inflation between 2009 and 2014 was about 10%. So, at least looking historically, this seems way off.

Of course, current precipitous declines probably won’t continue forever (most of the cost is now not modules). NREL says costs have been dropping on average 6 to 8 percent per year since 1998. If we assume just half of that decline per year (4 percent), solar energy would be around $51 per MWh in 2030. Using some very back-of-envelope calculations, a price difference of $46 per MWh in 2030 means costs for new solar energy shown in the Plan’s “Preferred Plan” scenario could be over-estimated by $97 million.

This is significant not just because the price estimates of the Preferred Plan may be too high. In preparing the plan, Xcel also ran seemingly dozens of other scenarios, some including CO2 reductions of over 50% in 2030 (compared with 2005). The price difference, according to Xcel, between the Preferred Plan scenario and the scenario with the largest CO2 benefit is $172 million (from Appendix J). These other scenarios which seem too costly may actually be more in line with what Xcel is currently asking to spend once dropping technology costs are factored in.

Xcel Energy: social cost of carbon is $21 per ton

Old news, but still worth posting. In October, Xcel Energy filed a report with the Public Utilities Commission defending the cost overruns of upgrading the nuclear power plant in Monticello. Via the Star Tribune:

Xcel filed the report in response to the state Public Utilities Commission’s pledge in August to investigate the Monticello investment. The company said that even with the cost overruns, the project benefits customers — saving an estimated $174 million through the remaining 16 years of its license.

Yet that cost-benefit number relies on a “social cost” comparison between keeping the nuclear plant, which emits no greenhouse gases, vs. generating electricity from a plant that does emit them. State law says utility regulators should consider the cost of greenhouse gas emissions, though they’re not currently regulated. Without carbon-emissions savings, the Monticello upgrade would be a losing proposition, costing customers $303 million extra over its life, according to Xcel’s filing.

In interviews, Xcel executives defended the investment, saying they would make the same decision today, even though the utility world has changed since 2008, when the project began. Natural gas, now a favored fuel for power plants, is low-priced thanks to the fracking boom. And electricity demand has lagged since the recession, dampening the need for new plants.

“If we didn’t have our nuclear plants, we would be taking a big step backward in terms of our CO2 accomplishments,” said Laura McCarten, an Xcel regional vice president.

If you dig into the dockets (CI-13-754), you can find that Xcel’s modeling assumptions include a price on carbon of $21.50 per metric ton starting in 2017.

Regardless of your feelings about nuclear power, a utility stating that the externalities of carbon should be priced when making energy planning/financing decisions is significant. The use of a ‘social cost of carbon’ (SCC) metric at the federal level has (not shockingly) been the point of some contention.  The Office of Management and Budget’s SCC is $35/mt in 2015 versus Xcel’s $21 in 2017.

Theoretically, we should start to see this figure or something similar used in all future energy planning decisions (Sherco, cough, cough) in Minnesota.  Unless of course, Xcel was only being selective in order to justify recovering this very large expense (and spare the shareholders).

It would be an interesting exercise to apply this Minnesota SCC to land use and transportation infrastructure and planning decisions.

Xcel Hiawatha DEIS released, public meeting scheduled

Rendering from Midtown Community Works Partnership of potential overhead lines

The Office of Energy Security has released the Draft Environmental Impact Statement (DEIS) for the Hiawatha Transmission Line Project, Xcel’s plan to run high-voltage lines along the Midtown Greenway (careful, the PDF is huge and will bog down even newer computers).  They have also announced a public meeting to take comments on the document on February 10th.

The DEIS does identify above-ground lines as having negative impacts on visual quality, being inconsistent with local urban design standards and potentially discouraging additional residential and commercial development nearby.

As I understand it, although the EIS has to identify mitigation strategies for the impacts of the project, it does not require that these mitigation measures be implemented if the project is approved.  From this TC Daily Planet article, it sounds as though the PUC may have the final say about mitigation, but I assume that the Department of Commerce is the responsible LGU, and would also have to approve a route and mitigation measures.

Either way, the public meeting is a chance for anyone to comment on potential additional impacts, whether the scale of impacts has been adequately measured, and the effectiveness of mitigation measures identified.  This is a good time to get involved.

How to replace the Xcel Hiawatha project, without spending $15 million

Let's just change our bulbs instead...

This post has been updated to account for my bad math.  Always make sure to check your Excel formulas!  Thanks Scott!

According to Xcel, energy conservation alone cannot meet their forecasted demand for power in Southwest Minneapolis and they must build a new power line over the Midtown Greenway.  Quoted in a Southwest Journal article, and in their Project Need documents submitted to the Minnesota PUC, Xcel claims that they forecast an increased demand of 50 megawatts by 2018 in the “focused study area” (see map on page D2 – 7 of the link above).  I think I can save them about $14.5 $12.5 million dollars and a lot of public meetings.

I did some quick figuring using GIS and the 2000 census figures, and the “focused study area” contains roughly 94,000 housing units.  This seems to make sense given that this area encompasses some of the most dense parts of the city.  If Xcel were to take a proactive approach to conservation, perhaps going door to door and volunteering to install new light bulbs for example, could they make a dent?  YES!  They could effectively eliminate the need for the Hiawatha project!  In fact, if they installed ten new CFL bulbs in one tenth 70 percent of the housing units in the study area, they would more than offset the forecasted growth in demand.  And it would only cost about $360,000 $2.5 million.  Even if they hired five full-time installers to do the job, it would still only cost around $600,000 $2.75 million.  Xcel could save about $14.5 $12.25 million, and the neighbors could go back to worrying about the future of NRP.  Check my math.  Is it really that easy? Apparently not since I flubbed it the first time.

Perhaps they’ve already factored in some type of conservation efforts, but the forecasted growth chart in the above document doesn’t seem to support that.  And even if they have, if you can get this much effect by simply replacing light bulbs, imagine what you could do if you spent the rest of the $15 milion on conservation.  Hopefully the EIS will include an independent estimate of just that.

Public meeting on Xcel’s proposed Hiawatha transmission project – get your comments in!

This Thursday, June 18th, the Minnesota Office of Energy Security is hosting a scoping meeting for Xcel Energy’s proposed transmission project.  The meeting will be held at the Midtown Global Market at 6 pm.  If you care about this project, you should attend, or submit your comments online.  All comments submitted must be responded to in the Environmental Impact Statement (EIS), and may even be able to shape the alternatives that are studied during the process.

This project would run a new overhead line along a 1.25 mile stretch of the Midtown Greenway between Midtown and Hiawatha Avenue.  Xcel says that increased electrical demand in the southwest portion of the city requires new infrastructure and conservation measures are not up the task.  The need is in the realm of 50 megawatts, according to an Xcel spokesperson.  An above ground line would cost $3 million while a buried line would cost $15 million, according to Xcel.

The Midtown Greenway Coalition, among others are asking that the power line be buried, or perhaps not built at all if conservation measures could be used to address the need.  Their concerns include aesthetics, health impacts, reduced development potential, and the removal of greenspace near the Sabo Bridge for installation of a substation.

If you go to this meeting, drop a comment here and tell me about your experience or your views on the project.