Electricity study aims to keep Minnesota lights on

CC/Flickr/Biker.Scott
Wind farms like this one at Buffalo Ridge will play an important but small role in securing Minnesota's energy future.

In late June, a line of severe thunderstorms moved rapidly across the East Coast, knocking out the power for more than 4 million people in 10 states and the District of Columbia.

Suddenly, they were without the modern conveniences most of us take for granted — electric lights and appliances, televisions and home computers, fans and air conditioners — all in the midst of a sweltering heat wave. Candles, flashlights and bags of ice became precious commodities during the outage, which lasted as long as a week for many residents of the region.

"You wouldn't want to live this way more than a day or so," an elderly Maryland woman told the Associated Press.

While such widespread outages are not common, the Citizens League of the Twin Cities says the U.S. power grid “has become continually less reliable as increasing demand has outpaced infrastructure investment.” By one estimate, power outages drain $79 billion a year from the nation’s economy.

Current system ‘unsustainable’

“Furthermore, our electrical system is unsustainable,” says the league, a nonpartisan public policy research group. “Our reliance on fossil fuels has detrimental impacts on health and the environment, and these resources will someday run out.”

For these reasons, the league has undertaken a study to determine what Minnesota’s electrical system should look like in the long term and what kinds of policy changes may be necessary to achieve these goals.

The league has engaged about 150 Minnesotans from diverse perspectives – including representatives from the utilities, energy and environmental groups, business, government and academia – to help identify the key characteristics of an “ideal” electrical system.

So far, they settled on seven characteristics that represent the ideal: affordable and competitive pricing, efficiency, sustainability, self-reliance (using in-state resources), reliability, safety and security.

“The next steps in this project are to examine whether we are on track to meet these goals and to imagine changes that will get us on track where we are not,” the league says.

In a working paper (PDF), the league says Minnesota and the Midwest are better off than many areas of the country when it comes to the reliability of the grid. It says the Midwest averages 92 minutes of power outages per year, compared with 214 minutes per year for the Northeast.

11 utilities team up on upgrade

Moreover, the 11 utilities serving Minnesota and the region have come together to undertake the first major upgrade of the grid in 30 years. Called CapX2020, the first phase of the initiative provides for transmission line improvements costing $1.7 billion.

This initiative will help “in moving renewable energy from the west to the east and making the system more reliable and redundant so that we don’t have serious outages,” says Rick Evans, director of regional governmental affairs for Xcel Energy, Minnesota’s largest electric utility.

Minnesotans have few complaints when it comes to the price of electricity. At 8.41 cents per kilowatt hour, the average retail price of electricity in Minnesota in 2010 ranked well below the 9.83-cent national average, according to the league. However, the price in Minnesota was higher than our surrounding states, with the exception of Wisconsin.

Electrical rates comparison

Avg. retail price* Avg. residential rate* Avg. commercial rate* Avg. industrial rate* Avg. monthly residential billt Avg. annual residential bill as % of household incomet
USA 9.83 11.54 10.19 6.77 $104.51 2.50%
Minnesota 8.41 10.59 8.83 6.29 $80.48 1.74%
Iowa 7.66 10.42 7.91 5.36 $86.25 2.15%
North Dakota 7.11 8.13 7.21 5.81 $87.17 2.18%
South Dakota 7.82 8.97 7.55 6.07 $86.88 2.31%
Wisconsin 9.78 12.65 9.98 6.85 $82.28 1.97%
Source: Citizens League
*2010 rates, cents per kilowatt-hour
t2009

Nonetheless, business leaders say price must be a major focus as the state looks to the future – for the simple reason that the cost of energy is an increasingly significant concern for businesses as they decide where to locate and expand.

“Our rates on average are still below the national average, but they are increasing faster than our neighboring states with the exception of Wisconsin,” says Bill Blazar, senior vice president of the Minnesota Chamber of Commerce.  “And they are going up faster than the rates in states we frequently compete with for jobs.”

“There also is enormous variation in rates around the state,” Blazar says. “They tend to be lowest, from a business perspective, in northern and northwestern Minnesota, and least competitive in southeastern Minnesota and into the Twin Cities.”

The major questions about the state’s electricity future revolve around our sources of power, and the economic and environmental impacts.

According to the league, Minnesota generates 58 percent of its electricity from coal, followed by 23.7 percent from nuclear, 10.7 percent from wind, 5.2 percent from natural gas and the rest from other sources. The eight coal-fired plants in Minnesota provide nearly 5,000 megawatts of generating capacity.

Coal-fired plants targeted

Coal-fired plants increasingly have become targets of federal and state regulators, as well as environmental groups, because of their impact on the environment and climate change. Electrical generation accounts for about a third of Minnesota’s greenhouse gas emissions, according to the league.

In recent years, Xcel Energy has retired two aging coal-fired power plants — the High Bridge plant in St. Paul and the Riverside plant in Minneapolis — and replaced them with new natural gas plants, which have reduced harmful emissions, such as nitrogen oxide, sulfur dioxide and mercury, by 97 percent or more. This was done primarily to help the two cities remain in compliance with federal air quality standards.

Now, the utility is evaluating the future of both the Blackdog plant in Burnsville and the Sherco plant in Becker.

Xcel’s Rick Evans says the 538-megawatt Blackdog plant, which dates to the 1950s, is “coming to the end of its useful life” and could be replaced natural gas plant — if it is replaced.

“With natural gas prices coming down and projected to remain low, a gas plant probably makes more sense there,” Evans says. “But at this point, we’re not seeing our demand for energy grow as a consequence of the economy and other factors. So that’s a decision that will probably be made down the road somewhere.”

The 2,400-megawatt Sherco plant, the first units of which were built in the 1970s, is much more central to Xcel’s operations. Company officials say they are evaluating investing in additional emissions controls on the plant’s two older generating units or replacing them with a natural gas facility.

The Rochester Public Utilities board recently completed a similar evaluation and decided this week to close its coal-fired Silver Lake generating plant. The utility says it can buy electricity on the open market more economically than upgrading the aging plant, which dates to the late 1940s.

Michael Noble, executive director of the advocacy group Fresh Energy, believes the region’s aging coal plants “face hundreds of millions of dollars in upgrades and may not be economically viable to meet modern air-quality requirements. Alternatives are going to be more economical than (throwing) good money after bad.”

Nuclear issue settled — for now

Nuclear power, once the hot energy issue in Minnesota, appears to be a settled question – at least in the near term.

The 600-megawatt Monticello nuclear plant and the 1,100-megawatt Prairie Island plant, which began operations in the early 1970s, each have had their 40-year licenses renewed for another 20 years. This means Xcel can continue operating Monticello until 2030, and Prairie Island units 1 and 2 until 2033 and 2034 respectively.

“All that stuff [about nuclear power] that has debated in the past is not on the radar screen,” Noble says. “Older nuclear power plants that are being refurbished and retooled and modernized are going to be part of the [energy] mix for a minimum of 20 or 25 years, without any doubt.”

After that, who knows? “Frankly, we don’t have any nuclear plants in the country that have been around for 60 years,” Evans says, so their future beyond the current licensing period “is something that needs to be addressed.”

Meanwhile, renewable energy is becoming an increasingly important source of the state’s energy portfolio. Minnesota's Renewable Energy Standard requires utilities to deliver 25 percent of their electricity from renewable sources by 2025 (Xcel Energy is mandated to deliver 30 percent by 2020, with 25 percent from wind).

Evans says Xcel is “on pace” to achieve those requirements, which once looked very ambitious. “When I started with the company 10 years ago, the engineers were saying they weren’t sure we could manage more than 10 or 15 percent from wind on the system.”

Unfortunately, renewable energy is no substitute for coal, natural gas or nuclear power.

Minnesota electricity use by type

chart showing generation sources of Minnesota electricity
Source: Minnesota Department of Commerce

“With current technology, we can’t rely on wind or solar for baseload needs for the reason, obviously, that it may not be there when you need it,” Evans says. “If the day ever comes when we have cost-efficient methods to store renewable energy and use it when the wind is not blowing and the sun is not shining, then potentially we could use it like a baseload resource.”

One policy option embraced by nearly everyone is conservation.

In June, Xcel filed a three-year conservation improvement plan that includes 56 energy-saving programs for residential and business customers. It is designed to meet the state goal of reducing demand by 1.5 percent, or enough power to serve the energy needs of 155,000 homes for one year.

Since 1992, the utility says, its conservation efforts have saved enough electricity to avoid the need to build nearly 10 medium-sized power plants in Minnesota.

“We’re basically building ‘energy conservative power plants’ – that’s one way to look at it,” Noble says. “They’re low cost, incredibly reliable, distributed throughout the energy grid. We’re reducing energy consumption 1.5 percent a year now, and it appears there is no end in sight.”

Annie Levenson-Falk, project manager the Citizens League study, says one idea the league intends to pursue is “tiered pricing” to encourage greater conservation efforts. It’s a simple idea: the more you use, the higher your rate.

Another possibility is encouraging the development of “distributed generation.” It involves moving away from large, centralized generating plants to small-scale technologies, such as solar panels to produce electricity close to the end users of power — with little reliance on the transmission grid.

Evans says Xcel intends to spend some time exploring this idea over the next several years. “It’s a significant change from the model we’ve employed for many, many years for producing and selling electricity, so it has implications not obvious to most people when they first start thinking about it.”

If you have a solar panel on your roof, Evans says, you will still be connected to the grid for electricity “when the sun isn’t shining.” So utilities will still need such customers to help pay for the larger generation and transmission system.

Last week, the Citizens League concluded a series of six workshops around the state to seek public input for their study. It is not expected to be completed until sometime next year.

Comments (10)

  1. Submitted by rolf westgard on 08/09/2012 - 09:40 am.

    In state resources nonsense

    The fact that “self-reliance (using in-state resources)” is one of guiding principles indicates that this Citizens League effort is headed for boondoggle status. Barring a miracle shift of Minnesota off the Canadian Shield to the Williston Basin for some natural gas and coal, or the discovery of uranium on the Iron Range, instate resources will be a pipe dream. We could burn corn ethanol in power plants, or cover the state with expensive erratic wind turbines, but cooler heads will likely prevail.

    There are good programs like District Energy in St Paul which welcomes my energy classes for tours. But for large scale base load power, there is no substitute for those four big turbines at Prairie Island nuclear, turning 60 times/second, day and night, rain or shine, wind or calm.

  2. Submitted by Robert Moffitt on 08/09/2012 - 09:12 am.

    Wind is working

    “Unfortunately, renewable energy is no substitute for coal, natural gas or nuclear power.”

    The pie chart shows that for nearly 11 percent of energy needs, it is a substitute. I’m sure we can do more, without worries about baseline power.

  3. Submitted by rolf westgard on 08/09/2012 - 10:24 am.

    Not my quote

    The correct quote from me would be, “renewable energy is a supplement for coal, natural gas or nuclear power.”
    The United Kingdom has gone big for wind with unfortunate results during winter cold spells.
    On the evening of December 20, 2011, Britain’s average temperature fell to minus 5.6 celsius. At 6.30 that evening, Britain’s 3,000+ wind turbines, which have a name plate generating capacity of 5,200 MW of electricity, were actually generating 40 MW.
    As Jeremy Nicholson, director of the UK Energy Intensive Users Group, states, “What is worrying is that these sorts of figures are not a one-off. It was exactly the same last January and February when high pressure brought freezing cold temperatures, snow and no wind.” Nicholson added, “We can cope at the moment because there is still not that much power generated by wind. What happens when we are dependent on wind turbines for more of our power, and there is suddenly a period when the wind does not blow and there is high demand?”

    Above about 10%, even smart grids go nuts trying to use wind or solar.
    REW

  4. Submitted by Connie Sullivan on 08/09/2012 - 11:19 am.

    The trouble with wind and solar is their intermittency. Solve that technologically, with forms of storage so that on windless or sunless days/nights we can still access energy previously generated, and we’re well on our way to sustainability.

    We must, we simply must, get away from coal burning.

  5. Submitted by Robert Moffitt on 08/09/2012 - 12:07 pm.

    While critics keep saying it can’t be done…

    …Minnesota’s utility companies, state lawmakers, the PUC and others are quietly making it happen. Some point out problems. Others solve them. Which side do you want be on?

  6. Submitted by Ray Schoch on 08/09/2012 - 01:16 pm.

    Argh! Conflicted!

    I’m inclined to agree with both Mr. Westgard and Ms. Sullivan, and yes, I know they’re somewhat contradictory positions.

    Wind and solar may serve admirably as supplements, but if we want reliable, dependable electrical power to keep our computers and stop lights and streetlights and electric heating devices going, they’re not a short or medium-term solution for the “base load.” Moreover, while I don’t agree that “boondoggle” status automatically follows an unrealistic expectation, I do agree that – unless there’s a geophysical event of catastrophic proportions, such as Mr. Westgard’s tongue-in-cheek suggestion about the underlying geology of the region, an event that would render much of this speculation about power sources irrelevant – with current technology and usage patterns, it’s simply not reasonable to expect (hope, yes, expect, no) in-state resources to provide the kind of power that the residents and businesses of the state customarily use.

    I’m well aware that coal is a toxic fuel, adding immeasurably to greenhouse gases as it burns, adding other toxic gases to the atmosphere, destroying huge amounts of landscape in the process of acquiring it, etc. That said, I don’t see any practical alternative at the moment. I truly loathe nuclear power – we have no idea what to do with the residue, which is among the most poisonous substances on this or any planet, and that’s without even considering the numerous ways that a nuclear plant could kill lots and lots of people via malfunction or inattention or, it should be said, terrorist action.

    Loathing, however, is no excuse. Nuclear power may turn out to be the least expensive, most practical way of ending our addiction to coal, supplemented by as many solar panels and wind turbines as we can tolerate as a society. Especially here in the North Country, there’s no getting around the variability of wind and solar power. To make them truly practical, we’d have to devise something very new as a means of storing whatever power those sources generate for use when wind and the sun are not available, and I’ve not read of any realistic means of doing so, at least here on the flatlands. In the Rockies, there’s serious consideration being given to dams and pumps that essentially recycle the same water for hydroelectric use, but St. Anthony falls isn’t going to be able to provide the whole state with electricity, even if it were to be converted to that use. Minnesota may have more hydroelectric resources than this newbie is aware of, but I see a state that’s basically flat, and that topography doesn’t lend itself to inexpensive hydroelectric generation. Even damming every North Shore river, ruining all those gorgeous state parks in the process, isn’t going to get us where we want to be in terms of power availability.

    We have no alternative for the environment we’re currently poisoning. None. That makes getting rid of coal as a major source of power an imperative. Natural gas, however, is not a solution except as an increasingly expensive supplement, since it, too, generally comes from oil-bearing deposits underground. Like oil, it’s going to go away eventually.

    There may be other technologies out there that will do the trick, but at the moment, industrial nations the world over rely on the steam-powered turbine to produce electricity, and making steam requires heat, which means something has to burn, or a controlled nuclear reaction has to be used. Yes, alternatives in the form of wind and the sun can supplement the primary source, but I don’t see them as being able to replace our current primary source. The climate here isn’t reliably-sunny enough to use solar power, and I somehow think a lot of people would object to covering most of the state with wind turbines, even assuming the wind would be steady enough to provide reliable power generation over weeks and month. Right now, it’s not that reliable.

  7. Submitted by rolf westgard on 08/09/2012 - 03:05 pm.

    getting away from coal burning

    The answer is from Einstein: E = mc2.
    c2 is a big number. You get millions of times the energy from an ounce of matter converted to pure energy than from conventional burning of that ounce. We don’t get all of that in our nuclear power reactors, but we get a lot. One of those finger joint size fuel pellets lasts for five years and equals at least a ton of coal. Future IFR reactors will raise it to twenty tons of coal.

  8. Submitted by Sarah Radosevich on 08/09/2012 - 04:29 pm.

    Conservation and electricity pricing

    Minnesota lacks the coal and natural gas resources of other states; it also lacks the huge flows of water that allow the Northwest to get so much of its energy from hydroelectric generation. While renewable sources and nuclear power are important generation options for Minnesota, conservation is a critical goal.

    It is interesting, then, to see the article note that our residential customers pay on average 1.74% of income to electric bills. This is significantly less than residential customers pay in neighboring states and across the U.S. If you read the Public Utilities Commission dockets, which are established each time a utility requests permission to increase its rates, you can see that a choice is frequently made to shift cost on to commercial and industrial customers, protecting residential customers from the full increase in the cost of their electric service. Residential customers then pay less than the true cost of electricity – which only discourages conservation.

    Instead of holding residential prices artificially low and giving utilities financial incentives to run conservation programs, how about we simplify the system? Let people pay an amount that’s closer to the true cost of their electrical service. Of course there’s room to assist those who can’t afford their electric bills, but a lot of us are getting a subsidy we don’t need, paying utilities to then encourage us to conserve, and hurting our state’s competitiveness in the process.

  9. Submitted by rolf westgard on 08/10/2012 - 05:52 am.

    Thanks to Sarah and Ray

    for some very good analysis. Sarah brought up a geologic miracle that I forgot – the sudden emergence of a mountain range in MN so we could have hydro power.
    Seriously, what we have to replace coal in the short term is natural gas, plus Sarah’s idea of higher residential pricing which would encourage conservation. Longer term its more conservation and nuclear.
    I do go with Mr. Moffitt on one of his plans – E85 ethanol fuel in our Midwest region where we make the stuff. Using ethanol too far from its source tends to limit its advantage.

  10. Submitted by Dale Hoogeveen on 08/10/2012 - 08:34 pm.

    energy storage

    When the subject of energy storage comes up most of us automatically register battery of some sort. There is another way to store excess energy and that is the flywheel. I think you will find one of them on each of the hybrid electric buses that run around the twin cities. The advantage there is that during breaking the breaking energy is converted to flywheel speed. What the windmills need would be a way to store excess wind beyond what they can convert and pump as electricity into the grid. We are definitely capable of advanced flywheels balanced like a gyroscope that would increase the capacity of windmill generation. When ever there is excess capacity in the grid kick up the flywheel. Tap it when other sources begin to flag. That wouldn’t need to just be in the windmills either.

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