Already a national leader in wind energy, Xcel Energy said Thursday it will increase its wind generation capacity in the Upper Midwest by 60 percent, enough electricity to power about 750,000 homes.
Minneapolis-based Xcel plans to add eight to 10 wind farms that will serve Minnesota, the Dakotas, Wisconsin and the Upper Peninsula of Michigan. Together, they will provide about 1,500 megawatts of power when the wind’s blowing. That’s almost as much as the 1,600 megawatts of power produced by Xcel’s two Minnesota nuclear facilities, though they essentially generate power constantly.
Xcel will own some of the new wind farms and buy power from wind farms developed by independent operators. The 1,500 megawatts of new wind power represent a $2 billion capital investment, said Chris Clark, president of Xcel’s Upper Midwest operations. “We believe this is one of the largest wind acquisitions in the country,” he said.
The new wind farms should come online between 2017 and 2020 and are part of Xcel’s long-term plan to move away from coal-fired power generation.
By 2030, Xcel expects one-third of its power generation in the Upper Midwest will come from renewable sources — mostly wind — up from 24 percent now. Nuclear will make up about one-third of Upper Midwest generation in 2030, as it does now. Coal is expected to fall to 15 percent of the company’s resource mix by 2030, down from about 33 percent now.
Utilities throughout the country are under pressure to move away from coal-fired generation, which has relatively high greenhouse gas emissions.
Xcel is seeking developers and construction firms for the wind farms now, issuing requests for proposals. By doing so, it expects to take full advantage of a federal wind power tax credit that will phase out by 2020.
The 30 percent tax credit, which is based on energy production, begins to step down in 2017. “We’ve got to get moving,” Clark said.
With the tax credit, wind power is often cheaper than electricity generated by natural gas purchased in long-term contracts. “We think this is a great value for our customers,” Clark said.
Fresh Energy, a St. Paul clean energy research and advocacy group, praised Xcel’s latest wind move. “Xcel’s visionary leadership on reducing the use of imported fossil fuels in the electric system is a model for utilities and energy companies across America,” Michael Noble, the group’s director, said in a prepared statement.
Xcel plans to own up to 50 percent of the wind generation announced Thursday, a departure from its past practice, though one that’s expected. Xcel currently gets the bulk of its wind power from long-term purchase agreements.
But by owning wind farms, Xcel can incorporate its investments into its rate base and thus get a return for its investors through the regulatory process.
For 12 consecutive years, Xcel has been ranked as the top U.S. wind energy-producing utility by the American Wind Energy Association, a trade group.
Earlier this year, the company made a big new wind energy commitment in Colorado. Xcel plans to invest $1 billion in a 600-megawatt wind project called Rush Creek, which would be Colorado’s largest wind farm. Colorado and Minnesota are Xcel’s biggest service territories.
Publicly traded Xcel, which has about $11 billion in sales, also has operations in Texas and New Mexico.
It is Minnesota’s largest utility.