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Wind turbines have created a rural skyline across Minnesota, one the nation’s leading states for wind energy. Solar farms, a rarity in Minnesota just a few years ago, now ring the Twin Cities.
Minnesota’s largest electricity providers say they have already met the state’s goal for at least 25 percent renewable energy generation by 2025. Wind power has become particularly cheap – even without a federal-tax subsidy – and several new wind farms will be rolling out in the next couple of years.
“Minnesota utilities have by and large embraced renewable energy,” said Ellen Anderson, executive director of the University of Minnesota’s Energy Transition Lab. “But they haven’t gotten to the next level where they think they should get rid of fossil fuel.”
Other states have enacted much more aggressive goals than Minnesota’s, which when passed 11 years ago made the state a national leader. And with the DFL gaining control of the Minnesota House in November’s election as well as retaining the governorship, expect to hear plenty of debate about energy in the upcoming Minnesota legislative session.
DFL legislators are likely to put up a raft of clean-power bills, including mandates for more wind and solar energy.
“The House change makes a huge difference,” said Anderson, a former DFL legislator.
Also, clean energy and environmental groups – spurred by an increasing urgency over climate change – are pushing for more aggressive movements away from coal.
‘Falling behind other states’
The Next Generation Energy Act was signed into law in 2007 by then Gov. Tim Pawlenty, a Republican. It set a 25 percent renewable energy goal by 2025; 30 percent for Minneapolis-based Xcel, the state’s largest electric utility.
The act also targeted a 30 percent economywide reduction in greenhouse-gas emissions from 2005 through 2025 – from power plants to cars to factories.
Progress toward that goal has been much more elusive. The utility sector, though, has been a relative bright spot, cutting emissions by 17 percent by 2014, the last period for which data are available.
During the past decade, Xcel has also proved to be a national leader in renewable energy. It’s long been the largest wind-energy provider among U.S. utilities. And the company has staked out an Upper Midwest electricity generation mix that would be 85 percent carbon-free by 2030 (including Xcel’s two nuclear plants).
The state’s utilities have not been recalcitrant about retiring coal-fired power plants, either: Since a landmark 2007 law that set clean-power goals for Minnesota, coal fell from 59 percent of electricity generation to 39 percent last year. At the same time, Minnesota renewable-energy generation – anchored in wind power – has increased from 8 percent to 25 percent.
Still, Anderson said that Minnesota is “falling behind other states.”
Hawaii’s renewable-energy target is 100 percent by 2045. Five states have adopted renewable-energy standards of 50 percent or more by 2030 to 2040: Oregon (for large investor-owned utilities), California, New York, Vermont and New Jersey. Two more states have 2030 renewable-energy goals of more than 40 percent.
And California recently passed a law targeting 100 percent carbon-free electricity, including nuclear energy, by 2045.
In the upcoming Minnesota session, DFL legislators will be at least pushing for a renewable-energy standard of 50 percent by 2030, a proposal that has been kicking around the legislature for a few years. Rep. Frank Hornstein, DFL-Minneapolis, said at a recent solar-industry conference that he intends to introduce a bill with a 100 percent renewable-power goal.
Higher goals “are the perfect discussion for a new [House] energy committee to have,” said Rep. Jean Wagenius, DFL-Minneapolis, who on Wednesday was named chairwoman of the House’s new energy and climate committee. “How aggressive should we be?”
Wagenius, like many clean-energy advocates, said there’s more urgency after an alarming October report by the U.N. Intergovernmental Panel on Climate Change (IPCC). The report concluded that the world’s carbon-dioxide emissions must fall steeply by 2030, and that nations must take “unprecedented” actions.
“It’s clear we need to do things faster and better,” Wagenius said.
Marketplace vs. mandate
However, resistance to higher renewable-energy targets is likely from conservative lawmakers and the Minnesota Chamber of Commerce.
“We think the marketplace and not mandates should dictate the electricity generated in the state,” said Lauryn Schothorst, the Chamber’s director of energy and labor-management policy. “If renewable energy is cost-competitive, there is no need for further mandates.”
Schothorst said that the state’s 2007 clean-power standards are a factor in Minnesota’s eroding position in energy prices compared to other states, as measured by the U.S. Energy Information Administration (EIA).
In 2017, the average retail price of electricity in Minnesota was 10.27 cents per kilowatt hour, compared with 10.48 cents per kilowatt for the U.S. average, according to data from the EIA. In 2007, those numbers stood respectively at 7.44 cents and 9.13 cents for Minnesota and the nation.
Minnesota’s electricity prices have particularly been rising vis-à-vis the national average in the past few years, the data show.
That electricity price data isn’t connected to rates consumers actually see on their bills, said Andrew Twite, a senior policy associate at the St. Paul-based research and advocacy group Fresh Energy.
Instead, it comes from a math formula regarding electricity sales, which doesn’t account for Minnesota’s greater efforts to cut energy consumption than the nation as a whole, he said.
Twite pointed to another set of federal data on monthly residential power bills. The data show that while the affordability gap between Minnesota and the country has narrowed a bit over the past decade, the average monthly Minnesota bill of $97.58 in 2017 was still 13 percent below the average bill nationally.
Ben Fowke, Xcel’s CEO, said the company’s bills have been flat and that they will be “manageable” going forward. “We have a great example in Minnesota of getting environmental benefits without sacrificing affordability.”
Xcel has “doubled down,” as Fowke puts it, on wind power in the past few years since it’s been the cheapest alternative for new generation. The company has several Upper Midwest wind projects in the pipeline, which together will have 1,850 megawatts of capacity.
Most of those projects will qualify for the full 30 percent federal wind-power production tax credit, which phases out by 2020.
Even excluding federal-tax subsidies, the cost of building and operating a wind farm in Minnesota in 2017 was less than the average U.S. cost of constructing a new gas-fired plant, according to a report earlier this year from Bloomberg New Energy Finance, a research company.
In a report released this month, financial-asset manager Lazard reinforced the idea of affordable renewables.
While coal, gas and nuclear plants are still critical for “baseload” power, the U.S. has “reached an inflection point where, in some cases, it is more cost-effective to build and operate new alternative-energy projects than to maintain existing conventional generation plants.”
The power of wind
Xcel isn’t the only Minnesota utility taking advantage of low-cost renewables, and the other companies also are primarily investing in wind.
Duluth-based Minnesota Power expects to buy power from a 250-megawatt wind farm in southwestern Minnesota expected to come online in 2019. Maple Grove-based Great River Energy will purchase electricity from a 300-megawatt wind farm in North Dakota, also set from production in 2020.
While Great River generates a lot of power in North Dakota, the wholesale cooperative is the largest provider of energy to Minnesota’s retail electric co-ops.
Great River said it will get at least 30 percent of its power from renewables in 2020, while Minnesota Power and Xcel are already either at or over that mark. All three companies plan to be at or over 40 percent by 2025.
That’s great, environmental and clean-power advocates say, but there still is work to do around the coal plants.
Xcel is scheduled to close two of its three big generators in Becker, Minn. – which together can provide 1,200 megawatts of power – between 2023 and 2026. That leaves the utility with two large Minnesota coal generators with indefinite timelines, one more in Becker and the other in Oak Park Heights.
Minnesota Power and Great River also have shut some coal capacity. But both operate big 1,000-megawatt coal plants, neither of which is slated for early retirement.
The recent IPCC climate change report shows the urgency of erasing coal from the electricity business, said Leigh Currie, energy program director for the Minnesota Center for Environmental Advocacy.
Under the Next Generation Power Act, the state’s greenhouse-gas reduction target climbs from 30 percent in 2025 to 80 percent in 2050 – and there’s no way that can be met without a “radical reduction in coal,” Currie said.
“Step one is to retire coal,” she said.
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