Minnesota is well positioned to meet the requirements the U.S. Environmental Protection Agency’s Clean Power Plan and could go much further with higher renewable energy and energy efficiency goals.
That’s according to a new report on Minnesota released today from the Union of Concerned Scientists (UCS), which has begun publishing analyses of the plan’s impact on each state.
“The model shows us Minnesota is a leader on clean energy and efficiency and that puts it in a great spot for meeting Clean Power Plan requirements – and potentially go further than what the plan requires in terms of carbon initiatives,” said Sam Gomberg, lead Midwest analyst for the UCS’s Climate and Energy Program.
“There is a significant amount of wind in Minnesota and it's doing really great on energy efficiency over the last couple of years,” Gomberg said. “The model shows us if Minnesota continues its investments and commitments to renewables and efficiencies that will provide benefits by reducing costs, stabilizing rates, reducing emissions and providing lower risk and lower-cost electricity across all the sectors – residential, commercial and industrial.”
The Union of Concerned Scientists is a member of RE-AMP, which publishes Midwest Energy News.
The Clean Power Plan calls for Minnesota to reduce emissions by 34 percent compared to 2012 levels. The state could meet that target with current and projected coal plant retirements and by maintaining the state renewable energy standard policies that call for 25 percent of electricity to be generated from renewable energy by 2025 (and 30 percent by 2025 for the state’s largest investor-owned utility, Xcel Energy).
Another contributing factor to decreasing emissions is Minnesota’s mandate that most utilities reduce annual retail electricity sales by 1.5 percent through energy conservation measures, he added.
The report lays out three potential approaches to the Clean Power Plan. One is simply continuing current policies in place today and the second, dubbed “Clean Power Plan Compliance Pathway,” calls for additional renewable energy and includes interstate trading of carbon allowances.
The third, the “Clean Path Case,” suggests a more aggressive stance that UCS says would save ratepayers $745 million from 2016 to 2030.
That option calls for more than $1 billion in energy efficiency improvements and adding 4,500 megawatts of wind and solar by 2030. Gomberg pointed out power purchase agreements for wind and solar are written for 25 years, offering much greater stability than natural gas or coal contracts that cover only three to five years.
Capital investments have declined dramatically for solar and wind, making them both now competitive with fossil fuel, or some cases cheaper. That trend should only continue, he suggested.
The plan would have renewables producing 34 percent of the state’s energy demand by 2030. Net imports of energy would decline 43 percent and coal generation would plummet 38 percent from 2014 levels. The efforts would generate as much as $205 million annually from the sale of carbon allowances from 2022 to 2030, the report projects.
The efficiency target could be reached by increasing the state's mandate from 1.5 percent to two percent, which some other states have done.
“When we model a two percent goal Minnesota gets an extra $1 billion in energy efficiency investments above what would already be invested,” he said. “It ends up saving you money in the long run. Often when we model energy efficiency you find slightly increasing electricity rates due to other factors. But energy efficiency is a way you’re able to reduce bills even though rates are increasing slightly. “
The report was written with the assumption that tax credits for wind and solar would extend only through 2018.
“When you factor that in you will get a lot more investments in renewable energy and it makes the Clean Power Plan look even less robust than we would like in driving additional investments,” he said.