Sherco, the Sherburne County Generating Station, in Becker, Minnesota.

Michael Hicks / Creative Commons

Sherco, the Sherburne County Generating Station, in Becker, Minnesota.

Analysis finds Minnesota coal units could shut down with little impact

Two units of the Minnesota’s largest and most polluting coal-based power plant could be shuttered without a significant impact to the electric grid under a plan developed by a group of environmental and energy organizations.

Sherburne County Generating Station, known as Sherco, will continue to operate Units 1 and 2 over the next 15 years under the most recent “integrated resource plan” submitted by Xcel to the state’s regulatory authorities in January.

While the utility argues those units are necessary to maintain the power supply for its 1.2 million customers, the “Clean Energy Plan,” as the proposal is called, argues differently.

It suggests Sherco’s two older plants could be closed and replaced by increased efficiency efforts and by the addition of natural gas peaking plants. With the closure of the two units would come a reduction of 11 million to 12 million tons of carbon emissions by 2030 and reduce environmental and health care costs – based on federal government data – by $1.2 billion.

“The Clean Energy Plan makes a convincing case it’s a better deal to retire Sherco 1 and 2 than continue operating them as Xcel has proposed,” said Michelle Rosier of the Sierra Club. Collectively the two units, built in the 1970s, can produce 1,300 MW.

“Our Clean Energy Plan allows the company to meet energy savings’ requirements – which its plan did not meet after 2020 – and benefits the Minnesota residents by closing the two dirtiest coal plants in the state,” said Fresh Energy science policy director J. Drake Hamilton.

Submitted to the Minnesota Public Utilities Commission in early July, the Clean Energy Plan is proposed by Fresh Energy, The Minnesota Center for Environmental Advocacy, The Sierra Club, Wind on the Wires and the Izaak Walton League of America’s Midwest Office.

All of the groups are members of RE-AMP, which publishes Midwest Energy News; Fresh Energy is the organization where Midwest Energy News is based.

In 2013 the PUC unanimously asked Xcel to consider retiring Sherco 1 and 2 in its future plans.

The Clean Energy Plan employs much of the same data and modeling Xcel and the state use. Unit 1 could close in 2021 and Unit 2 in 2024 “at no extra cost” to the company while substantially reducing carbon dioxide emissions, Hamilton said.

For the 2021 closure Xcel “won’t need any more energy, which defies a common assumption,” she said. “They are actually over capacity until 2023.”

The PUC has approved contracts over the past years for Xcel to buy more wind, solar and natural gas, creating an oversupply. “They don’t need to replace Sherco 1 with anything because that capacity is already in the pipeline,” Hamilton said.

In later years the Clean Energy Plan predicts natural gas plants might have to be added – as much as 1,300 MW – but even that prospect remains uncertain. A decade from now the price of wind and solar will likely drop enough to compete with natural gas, she said.

The plan does praise Xcel’s commitment to renewable energy and folds in what the utility has already proposed on that front – 2,500 MW of wind resources, and 1,700 MW of solar.

Moreover, the plan notes that an extension of a contract with Manitoba Hydro would displace some of the natural gas that would otherwise be added after 2024.

Xcel’s own planning looked at retiring both Sherco facilities by 2023 and found the price differential between closing and keeping them was tiny, much less than 1 percent.

The Clean Energy Plan argues for less expensive options than natural gas, such as a combination of solar, wind,and combined with Canadian hydro.  As renewables drop in price they could become even a stronger part of the energy mix, reducing the need for natural gas, said Rosier.

The advantages of solar combined with more sophisticated storage technology could eliminate the need for a huge push into natural gas after 2024, she added.

The plan does not call for closing Sherco 3, a much newer 860 MW coal plant with sophisticated pollution controls.

“This is the first part of an ongoing dialogue with them,” Rosier added. “Xcel is doing what I consider model work in collaborating with clean energy advocates and the state of Minnesota.”

Xcel offered a prepared comment to the PUC which said its plan offers greater reliability and affordability.

“We share the same goal as many of the stakeholders who are weighing in on our resource plan – delivering cleaner energy to our customers – we just may have different perspectives on how best to get there,” the utility said.

“Continuing our leadership in delivering cleaner energy was the key driver in our resource plan, but we approached it in a way that also stresses the importance of reliability and cost to our customers.

“While others may not share our perspectives on the importance of reliability and affordability, we do share the same goal of delivering cleaner energy to our customers and look forward to working with all stakeholders as this process continues.”

Editor’s note: This story has been updated to correct a mischaracterization about the Clean Energy Plan’s recommendation regarding Manitoba Hydro.

One thought on “Analysis finds Minnesota coal units could shut down with little impact

  1. I’m wondering what the area of analysis was (Minnesota or the larger region) and if this analysis looked only at meeting total demand or took into account reliability and congestion issues? Given Minnesota has semi-isolated load pockets related to the bigger wholesale market and reliability region (MISO and MAPP) that is ultimately responsible for balancing the regional grid, it wouldn’t be appropriate to look at this issue just within the bounds of Minnesota/the retail market. I would suspect (though don’t know for sure) that when taking the larger wholesale market/reliability region into account that Sherco 1 and 2 are important, at least in the short and medium term, for balancing the system. Just a thought as I’ve seen many state-related analyses leave out wholesale and reliability region considerations.