Duluth utility Minnesota Power on Tuesday said it hopes to produce energy without any carbon emissions by 2050 in part through an expansion of wind and solar generation, a major new goal that company officials said was set in response to global climate change.
Minnesota Power, which also plans to eliminate coal from its system by 2035, is now the second privately owned electric utility in the state to pledge 100 percent carbon-free energy by midcentury after Xcel Energy did so in 2018.
Minnesota Power in December became the first utility in the state to provide 50 percent renewable energy on its system and has shut down most of its coal plants. But the company has also been locked in debates over how fast it can and should become 100 percent carbon free and retire coal while balancing the needs of energy-hungry iron mines and paper mills in the region.
In an interview, Bethany Owen, president and CEO of Minnesota Power’s parent company, ALLETE Inc., said the utility is committed to keeping energy reliable and affordable but is also “committed to the climate.”
“Today’s announcement is really just the continuation of the journey we’ve been on for many years to provide increasingly cleaner energy,” Owen said.
Reaction to the Tuesday announcement was mixed. The Iron Mining Association of Minnesota is concerned new spending on energy infrastructure could lead to higher power bills for the industry. Environmental groups criticized Minnesota Power for sticking to a proposal to build a $700 million natural gas plant in Superior, Wisconsin, and pushed for more details about the utility’s plans.
But Bret Pence, Greater Minnesota director for the climate advocacy group Minnesota Interfaith Power and Light, also said “it’s great that they’ve recognized the gravity of the moment and they’ve made this commitment.”
How a coal heavy utility is now 50 percent renewable
Minnesota Power provides electricity for 145,000 residential and commercial customers across northern Minnesota. About 60 percent of the company’s power, however, is used by industrial operations, primarily six taconite facilities and four paper and pulp mills, generating about 74 percent of the utility’s revenue.
It’s an unusual share of energy-intensive industrial customers that is unique in Minnesota and possibly in the country. In 2005, 95 percent of Minnesota Power’s energy came from coal. But the company shifted toward renewable energy amid growing calls to slash greenhouse gases that cause climate change, and also because of federal tax credits for wind power and state laws ordering utility companies to have 25 percent renewable energy by 2025.
Minnesota Power has now closed five of its nine coal-fired generating units and converted two others to natural gas production.
Wind and solar aren’t readily available in the region, and unlike Xcel Energy, Minnesota Power has no nuclear plants to rely on. So the Duluth utility bought wind farms in North Dakota and southwest Minnesota and large amounts of hydropower from a Manitoba utility. The company had to build and repurpose giant transmission lines to use the energy. The latest, the Great Northern Transmission line, started working in June. The utility has also proposed a new natural gas plant in Superior, Wisconsin.
Minnesota Power hit 50 percent renewable energy in December. The vast majority of that power is produced by carbon-free sources, though some comes from biomass.
Xcel plans to be coal free by 2030 and 100 percent carbon free by 2050. Xcel does produce more than 50 percent carbon-free power in the Upper Midwest, though much of it is from nuclear, which Minnesota law does not count as renewable.
In February, Minnesota Power will submit a detailed 15-year energy generation plan to state regulators. Ahead of that, environmental groups have called for the utility to retire its two remaining coal units early and pledge to become 100 percent carbon-free. Despite Minnesota Power’s ongoing transition to cleaner energy, there has been increasing pressure from politicians and environmental groups in Duluth for Minnesota Power to move faster than it has.
Meanwhile, large industrial customers have angled to keep the two coal units, at the Boswell Energy Center in Cohasset, from retiring early. That’s in part because they provide steady energy and don’t come with the costs of building new infrastructure for renewable power. Those mines and mills are large job providers and politically influential in the region.
(Boswell also provides nearly 70 percent of Cohasset’s tax revenue and is 13 percent of Itasca County’s tax base.)
Earlier this year, Minnesota Power declined to commit to a goal for when it could offer carbon-free power. The company said it could be difficult to keep energy reliable and affordable if it were overly reliant on wind and solar, which can produce energy sporadically. But it kept its future energy plans under wraps.
How Minnesota Power hopes to go 100 percent carbon free
Now, the Duluth utility says it hopes to produce energy with 80 percent less carbon-output compared to 2005 levels by 2035 and move to 100 percent carbon-free energy by 2050.
To do that, Minnesota Power plans to add a chunk of new wind and solar power to its system by 2030, allowing the company to reach 70 percent renewable power. The company is still evaluating where to site that wind and solar. One possibility is at the Boswell plant. Solar could be built in northeastern Minnesota, but wind projects will likely be built outside of the region.
Then, Minnesota Power wants to retire one unit at the Boswell coal plant by 2030 and transform another to be coal-free by 2035. The utility is exploring whether it can convert the last Boswell unit to produce energy with other fuels like natural gas, biomass or hydrogen.
In the meantime, the utility also plans to use Boswell coal only some of the time. Julie Pierce, vice president of strategy and planning for Minnesota Power, said they’re hoping to start that for one unit of the plant in 2021. Regulators approved a plan last year for Xcel to use coal seasonally when energy needs were highest, a relatively new strategy sparked by the rising price of using coal compared to other energy forms.
Minnesota Power also plans to use evolving technology, energy conservation and other strategies to reduce its power use and help it reach carbon-free goals.
Pierce said the company still plans to pursue its Superior gas plant, known as the Nemadji Trail Energy Center, which environmentalists have criticized as an expansion of fossil fuel use and industrial customers have said is not worth the expense to build. The plant is currently tied up by court challenges. Natural gas “is going to play a modest but important role to ensure the reliability and affordability” of the energy grid, Pierce said. The utility doesn’t know when or exactly how it will transition away from natural gas yet, Pierce added.
Owen said the 100 percent carbon-free goal came after more than a year of behind-the-scenes discussions with groups like environmental nonprofits and industrial customers.
The Sierra Club has argued it would be cheaper to retire Boswell by 2029 and replace it with clean energy options. Jenna Yeakle, an organizer in Duluth for the Sierra Club, said it would be “ideal” to close both units at Boswell by 2030. But she said Minnesota Power “listened” to a call for energy transition and “that’s a really big deal.”
“Their acknowledgement of the climate crisis, their acknowledgement of community demands to transition to clean energies — it’s like a new era,” Yeakle said.
Pence, from Minnesota Interfaith Power and Light, said building Nemadji Trail “really doesn’t fit into that narrative of trying to move” quickly to carbon-free energy. His group still opposes the project, as do the Sierra Club and other environmental nonprofits.
“The urgency of climate change demands action now, not in the last few years before 2050,” said JT Haines, northern Minnesota advocate for the Minnesota Center for Environmental Advocacy. “If Minnesota Power is serious about moving to clean energy, it wouldn’t be glossing over plans to build a $700 million fracked gas plant, which would add 2 million tons of pollution to the atmosphere every year. We have reliable options now that are cheaper and cleaner.”
Still, Pence said it’s “gratifying” to hear Minnesota Power hopes to dispatch a coal unit only part of the time, even if he may have critiques about specifics once the utility divulges them. “Now we just want to work with them and other partners across the region to make sure the details match their sentiment,” he said.
Kelsey Johnson, president of the Iron Mining Association of Minnesota, said the industry has faced higher energy prices as Minnesota Power has shifted toward renewable energy. She said the cost to build wind farms, solar arrays and the Nemadji Trail gas plant could spike those rates higher, and urged Minnesota Power and state officials “to really be mindful and do our diligence as a state to ensure that electric rates are competitive.” Iron mines make up 50 percent of Minnesota Power’s customer base, Johnson said, and energy is always a huge expense for mines.
“How much longer can we incur these costs without seeing any kind of real rate relief?” Johnson said.
Owen said the 15-year plan for state regulators is more about planning energy supply than power rates, but she said affordability is still top of mind for Minnesota Power as it moves ahead.
“Making sure that our rates are appropriate for this transition will be really very important,” Owen said. “We do believe that the time that we built into this plan and this vision will allow us to take advantage of innovation and technology as it advances so that rates do continue to remain affordable.”
The Citizens Utility Board of Minnesota, a nonprofit that advocates for a low-cost energy transition, said on Twitter the organization looks “forward to making sure they’re on the path to 100% that is best for their consumers.”
As the state Legislature convenes, lawmakers will once again be negotiating over proposals to make it tougher for utility companies to add new fossil fuel energy and Gov. Tim Walz’s proposal to require power companies to reach 100 percent carbon-free energy by 2050.
Despite Minnesota Power’s plans for 100 percent carbon-free energy, Owen, the ALLETE president, said the company “doesn’t support, necessarily, a mandate because we believe we’re doing the right thing without a mandate.”
“We believe that we’re leading and exceeding what past mandates have been,” she said.