POWER March 2016 - 40

GENERATION TRANSITIONS
Xcel Energy: Committed to
Renewables, but Going Its Own Way
Powerful regional utility Xcel Energy, which owns electric and gas utilities in
the middle of the U.S. featuring major wind and growing solar resources,
is making a big commitment to renewable generation. But for Xcel, going
green means choosing its path: the utility-controlled road to renewables.
Kennedy Maize
U
tility holding company Xcel Energy,
headquartered in Minneapolis and
with large electric and gas operations
in eight states in the upper Midwest, the
Rocky Mountain West, and Texas, has ambitions
to be the nation's leader in renewable
electricity generation. At the same time, as
with many power generators, the company is
moving away from coal, once a staple, and
relying on natural gas as a transition and balancing
fuel.
Reflecting the views of many electric generating
utilities, Xcel's model for renewables
is utility-centric. The company believes that
big utility-scale renewable facilities are the
most economical approach overall for customers,
and, of course, the most profitable
for the company. For wind power, where
small is not on the menu, that's conventional
wisdom. For solar, with enthusiastic rooftop
troops, it's controversial.
Green Goals
" We've been in the process of adding substantial
wind for over a decade, " Kent Larson,
Xcel's executive vice president and group
vice president for operations, told POWER.
" We have 6,500 MW of wind, and we'd like
to have more. " Larson noted that Xcel, with
a service territory mostly in the upper Midwest,
has " some of the best wind resources in
the country. " The company is also looking to
add substantial solar photovoltaic generation
to its system and says it will add 1,800 MW
of wind and 1,400 MW of solar by 2030.
Xcel CEO Ben Fowke at a Wall Street
investment conference last December rolled
out a $15.2 billion capital investment plan,
which calls for a lot of wind and solar, along
with transmission upgrades to get renewable
generation to consumers. Fowke called the
plan " steel for fuel, " where wind turbines,
made with lots of steel, offset the need to pay
fuel suppliers for coal and gas plants.
Not incidentally, the company's carbon
) reduction target is more ambidioxide
(CO2
tious than the one in the Obama administra40
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POWER
| March 2016
tion's Clean Power Plan. Xcel is aiming for a
60% cut in CO2
emissions by 2030-double
the administration's target.
When President Obama announced the
details of his plan to cut CO2
emissions from
coal-fired power plants, Xcel was largely supportive.
The company was part of the White
House ceremony unveiling the final Clean
Power Plan last summer. Fowke said, " While
we expect the Clean Power Plan does not
provide everything we hoped for in terms of
fully recognizing the early actions of proactive
states and utilities, Xcel Energy is ready
to move ahead. "
Larson said, " Ten years ago, we embraced
the goal of being the environmental leader in
our industry, " adopting plans to buy wind and
build the necessary transmission to bring the
power to customers. The utility is on a path
to reduce its carbon emissions 30% by 2020,
well ahead of the administration's plan. Larson
noted that there were advantages to moving
out first in the renewables race. " We did
the work way ahead of the rush " brought on
by the impending governmental move away
from fossil fuels, he said. " We were able to
do it ahead of time, at our pace, and costeffectively. "
Larson added that Xcel also has
developed " by far the best wind forecasting
system " in the industry as a result of experience
gained in its long embrace of wind
power.
Wind Leader
The American Wind Energy Association
(AWEA) ranks Xcel as the leading wind
energy utility in the U.S. MidAmerican is
second, followed by Southern California
Edison, Pacific Gas & Electric, and American
Electric Power. Xcel has been at the top
of AWEA's ranking for a decade.
The company is moving away from power
purchase contracts for wind and toward direct
ownership. The Minneapolis Star Tribune
newspaper noted, " In its four most
recent wind farm deals in Minnesota and
North Dakota, Xcel purchased three of the
projects from the developers and signed a
power purchase deal on the fourth. " Larson
acknowledged that utility-owned wind is the
company's preferred approach.
For the utility, buying the wind farms
outright adds to the company's rate base, on
which it earns a regulated return. " If you do
it right, " says Fowke, " you can grow the rate
base and not increase customer cost because
you just reduce your use of gas. " That means
cash flowing to the company's bottom line.
Larson acknowledged that owning renewable
generation also allows the utility to take advantage
of subsidies.
Fowke said that the company's plan " won't
see us getting overly dependent on natural
gas in the future even as we transition away
from coal. The reason is that we are replacing
it with renewables, with gas backstopping
growing generation from intermittent wind
and solar. " The gas plants, he said, " are not
going to be used as much. "
Recent deals demonstrate Xcel's embrace
of wind as an owned resource. In May 2015,
Xcel agreed to acquire the incomplete Bor " Ten
years ago, we embraced the
goal of being the environmental
leader in our industry. "
-Kent Larson, executive vice president and
group vice president for operations, Xcel Energy
http://www.powermag.com
POWER March 2016

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