Minnesota’s state legislature has ramped up the clean energy targets for electric utilities with a bill that would ensure utility customers would receive 100% of their energy from only carbon-free resources 10 years sooner than many utilities had initially planned.

Minnesota

A 35-member group of Minnesota Democratic-Farmer-Labor (DFL) Party House members introduced House File (HF) 7 at the start of the year. 

HF7 sets a carbon-free standard under which all electric utilities, including electric cooperatives, must generate or procure their energy for retail distribution only from eligible technologies that include solar, wind, hydroelectric facilities already in operation, green hydrogen and renewable natural gas from certain sources. 

In April 2019, Gov. Tim Walz (DFL) initiated the One Minnesota Path to Clean Energy, under which the state would target 100% clean energy for the state’s electricity sector by 2050. 

A series of legislative measures required electric utilities to reach 25% clean energy retail sales by 2025. In 2018, however, Minnesota achieved that benchmark, surpassing the 2020 objective to reach 20% clean energy as well. 

Now, HF7 would set new interim goals, with electric utilities and cooperatives being required to generate or procure enough electricity from eligible sources to serve at least 80% of retail needs by the end of 2030, followed by 90% by year-end 2035 and 100% by the end of 2040. 

During last week’s House Climate and Energy Finance and Policy Committee meeting, House Majority Leader Rep. Jamie Long (DFL-61B), brandishing a wind turbine pin on his lapel, noted, “the last eight years globally have been the hottest eight on record…

“Climate change is impacting our farms from increased flooding, soil erosion, and weather variability. It’s impacting our cities from costly repairs and upgrades to our infrastructure. And it’s impacting our state traditions from snowmobiling to trout fishing. 

“And the fossil fuel pollution that’s causing climate change is harming us too,” Long said. 

[Decision Maker: A real-time news service focused on the North American natural gas and LNG markets, NGI’s All News Access is the industry’s go-to resource for need-to-know information. Learn more.]

As the state has no proved reserves, “we send $13 billion out of state each year to buy energy. That’s 4% of our state GDP that could create jobs right here in Minnesota. We should spend this here to build wind and solar instead, and make the 140 tons of steel in each wind turbine with Minnesota-made taconite.”

Minnesota, which does not have any proven natural gas or crude oil reserves below its surface, relies on a mix of coal, fossil fuel imports, nuclear generation, hydroelectric power and other renewable resources for the state’s electricity needs

According to data from the U.S. Energy Information Administration (EIA), as of October 2022, natural gas-fired generation represented only 18.7% of Minnesota’s utility-scale electricity generation, well below the U.S. average of 42.4%. Coal-fired generation was at roughly 25.2% as of late last year, while nuclear generation supplied 22.6% of Minnesota’s electric utility needs. 

Renewable resources, on the other hand, represented 32.8% of Minnesota’s utility-scale net electricity generation, a little more than 12% above the U.S. average of 20.7%, according to EIA data. 

According to Long, while Minnesota has been a frontrunner in the energy transition, with “the first industrial-scale wind farm between California and Denmark,” the state has fallen behind, and may not reach its goal of reducing carbon dioxide (CO2) emissions by 80% by 2050. 

That said, Minnesota’s three largest utilities, including Xcel Energy Inc.’s Minnesota branch, “have all committed to 100% clean energy,” meaning “over 80% of Minnesota electric customers already have a utility that is already committed to rapid decarbonization,” Long noted. 

According to Long, Xcel reportedly saved $200 million for customers after “installing renewable energy instead of gas.” 

Open To Amendments

“Utilities have said that while climate is important to their customers in making these decisions, the real driver is cost,” said Long. 

The representative cited data claiming that wind and solar have declined in cost so much in the last decade that wind is now “the cheapest form of electricity, period,” and the two generation methods are absent the “susceptibility to fuel price swings like we’ve seen with gas prices recently,” Long said.

The Citizens Utility Board (CUB) of Minnesota, in a letter signed by executive director Annie Levenson-Falk to lawmakers, said last week that while the organization supported the bill, CUB “is very concerned about the increase in energy costs over the last couple of years – the cost of fuels, in particular…”

CUB, a nonprofit organization that aims to represent the interests of Minnesota utility customers, said that “renewable energy is typically the least expensive electricity option,” but noted that “the grid needs different types of flexibility to operate with high levels of intermittent wind and solar…”

The nonprofit said it was “confident” electric utilities could achieve 90% renewable electricity “without risking reliability or increasing costs,…but the final 10% requires some faith.” 

As such, CUB requested that HF7 include Minn. Stat. § 216B.1691, subdivision 2b, which provides an offramp for utilities if renewable energy “becomes too expensive or if it would compromise reliability to meet the milestones,” wrote Levenson-Falk. 

Following the Wednesday Climate and Energy Finance and Policy Committee, HF7 included a provision that would allow electric utilities to delay or modify the clean energy target. The utility would have to undergo a governmental review that would take into account multiple factors, including whether the utility had taken “reasonable measures to maximize cost-effective electricity delivery from eligible energy technologies in advance of transmission availability,” the bill now reads. 

As amendments were being added to the legislation, Long also highlighted that the committee decided to add a section that would allow the Minnesota Public Utilities Commission (PUC) to order public utility-owned coal-fired generation units to reduce CO2 emissions. 

If the bill and the provision passes, the PUC may be able to require the public utility to implement a plan to only operate coal-fired units from June-August and December-February, or unless for emergency measures. The PUC may also be permitted to set a limit on CO2 emissions from coal-fired electric generating units

Concerns From Cooperatives

Government Affairs Representative Brita Endrud, said on behalf of Minnkota Power Cooperative., a nonprofit electric generation and transmission (G&T) company serving northwestern Minnesota, that the cooperative had “many serious concerns with this bill…” 

Chief among the concerns was the ability for cooperatives to maintain reliability and affordable resources with a more rapid timeline. 

“Minnkota recognizes the need to decarbonize the electric sector, but this must be approached with the utmost care and consideration,” Endrud said, noting that rural areas “have unique needs” that have allowed the cooperatives to make “self-governance central to moving their communities forward” while working with policymakers.

Cooperative utilities provide about 23% of Minnesota’s electricity needs, compared to investor-owned utilities providing about 62%. Municipal utilities deliver the remaining 15% of power, according to a 2021 report from the state’s Department of Commerce. 

HF7, Endrud noted, “erodes cooperative governance with a one-size-fits-all policy approach…”

Grand Forks, ND-based Minnkota, therefore, advocated for exemptions from the rule for out-of-state generation, as “There are legal questions regarding the impact on out-of-state generation units outside of Minnesota,” Endrud said. 

More Options To Reducing Emissions

During the energy and policy committee meeting, Minnkota also advocated for the state to “include all technology” that may help reduce emissions. 

Minnkota operates two coal-fired units at its Milton R. Young Power Plant that supply its customers with a combined 705 MW of electricity. In addition to its “aggressive wind portfolio…Minnkota is also pursuing and undertaking one of the most ambitious carbon capture projects in the world, Project Tundra,” Endrud said. 

Project Tundra, for which a final decision on whether to move forward with construction is anticipated by the end of 2023, would capture more than four million tons/year of CO2 from the coal plant. 

“That is equivalent to taking 800,000 fossil fueled vehicles off the road,” Endrud noted. The generation plant would see a 90% reduction in CO2 emissions, according to Minnkota’s 2021 Annual Report. 

In similar news, Minnesota Republicans introduced HF342, which would make it Minnesota state policy to “support the development and deployment of carbon capture and sequestration technologies…as a method of reducing greenhouse gas emissions” in order to achieve statewide greenhouse gas emission goals.