Xcel Energy is exploring renewable natural gas, making it the state’s second big utility to pursue extracting energy from livestock manure, landfills and water treatment refuse.
Minneapolis-based Xcel Tuesday said it is looking at sources of renewable gas with the idea of eventually offering it to customers.
“This is a big information and data gathering exercise at this point,” said Jeff Lyng, Xcel’s director of energy and environmental policy. “We have to better understand the opportunities.”
Xcel expects to bring a renewable gas plan before Minnesota utility regulators late this year or in 2021.
Xcel will gauge customer demand for renewable gas in the coming months. Customer participation would be voluntary and not subsidized by other ratepayers.
But there’s likely to be a premium for renewable gas (RNG). Its costs more to produce and deliver than fossil-fuel gas, which is near historically low prices.
CenterPoint Energy, Minnesota’s largest natural gas utility, has already proposed a renewable natural gas pilot program, but it was unanimously rejected last year by the Minnesota Public Utilities Commission (PUC).
The high cost of RNG, even if purchased voluntarily, was one of the PUC’s concerns. Regulators also had questions about the transparency of renewable natural gas procurement and out-of-state gas sourcing.
Still, the PUC seemed to like the idea, and asked CenterPoint to refine its proposal, which the company has continued to do.
Xcel, Minnesota’s second-largest natural gas supplier, put out on Tuesday a “request for information” to renewable natural gas project developers, suppliers and marketers. The request covers all eight states served by Xcel. Responses are due July 15.
“We think there could be value in renewable natural gas both from a [greenhouse gas] emission standpoint and a customer standpoint,” Lyng said.
RNG is produced by the breakdown of organic waste through anaerobic digestion. Xcel launched a small RNG project in Colorado last year. It partnered with the cities of Englewood and Littleton to capture methane from wastewater-treatment facilities and inject it into the company’s natural gas distribution system.
Lyng said that dairy farm manure digesters are particularly efficient in overall carbon dioxide emissions.
After processing, renewable gas is mixed with fossil-fuel gas before being delivered to a customer’s home.
RNG faces several challenges. The RNG supply system is underdeveloped. Plus, unlike with renewable electricity, there is no independent system to verify that renewable natural gas is indeed produced from renewable resources.