It’s rare when the interests of industry, customers, governments and investors align, but that is what’s happening as Wisconsin’s largest utilities plot a path toward carbon-neutral energy generation by 2050.
WEC Energy Group, the Milwaukee-based parent company of WE Energies and Wisconsin Public Service Corp., and Madison-based Alliant Energy Corp. have laid out plans to shut down greenhouse gas-emitting coal plants in coming years and replace them with clean solar parks and wind farms. Their goals are the same: Carbon neutral emissions by 2050.
The pace of change has accelerated in recent years as the cost of solar power units plummeted and utilities responded to growing public and investor support for reducing emissions and sustainability initiatives. The utilities produce ESG Reports to highlight their environment, social and governance efforts.
A June 2020 Pew Research Center survey found 63% of Americans see climate change’s effects in their communities, 65% said the government is doing too little to reduce the effects of climate change and 79% want the country to prioritize developing alternative energy sources.
Major investment firms now factor ESG performance into their strategies, as well. A 2020 survey by BlackRock found 54% of respondents included sustainability in their investment strategy. Vanguard and Fidelity offer a slate of ESG funds and Fidelity reported two-thirds of its retail customers factor social issues into investing decisions.
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“This larger transition we’re in the middle of, toward clean energy, has many key drivers, but one of them is customers,” said Xia Liu, WEC Energy’s chief financial officer. “Many say they want renewable energy. Customers have already been a huge driver in this. Large, commercial industrial customers have been very vocal that that’s what they want. They investor community, also, is very vocal about being clear about where we’re going and what we’re doing to address our emissions.”
In response, to those demands and changing economics, the companies since 2018 have shut down several coal-fired plants and scheduled more for shutdown by 2025. They include:
- Pulliam Power Plant, 200 megawatts, in Green Bay (WEC)
- Edgewater 4, 100 megawatts, in Sheboygan (WEC)
- Pleasant Prairie Power Plant, 1,190 megawatts, in Pleasant Prairie (WEC)
- Presque Isle Power Plant, 350 megawatts, in Marquette, Mich. (WEC)
- Edgewater Generating Station, 414 megawatts, Sheboygan by 2022 (Alliant)
- Columbia Energy Center, 1,100 megawatts, near Portage, by 2024 (Alliant)
- Oak Creek Power Plant, 1,135 megawatts in 2023 and 2024 (WEC)
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The coal-fired plant closures are now being outpaced by the number of solar parks that have begun operation or are currently under construction. Solar investments include:
- Two Creeks Solar Park, 100 megawatts, in Manitowoc County (WEC)
- 200 megawatts in Grant County (Alliant)
- 150 megawatts in Sheboygan County (Alliant)
- 150 megawatts in Wood County (Alliant)
- 75 megawatts in Jefferson County (Alliant)
- 50 megawatts in Rock County (Alliant)
- 50 megawatts in Richland County (Alliant)
- Badger Hollow Solar Farm, 100 megawatts, Iowa County (WEC)
- Badger Hollow II Solar Farm, 100 megawatts, Iowa County (WEC)
- Paris Solar-Battery Park, 180 megawatts solar and 99 megawatts battery, Kenosha County (WEC)
Utilities have grown more ambitious in their renewable rollouts in the last year alone. Alliant announced six solar power projects in May 2020 that will produce a combined 675 megawatts, the first phase of its plan to add 1,000 megawatts of solar capacity by 2023, enough to power 260,000 homes. And WEC in February announced the $400 million Paris Solar-Battery Park; the utility’s share of the solar and battery complex will provide enough electricity to power 60,000 homes. That comes on the heels of Two Creeks, the state’s first large-scale solar farm, going online in November.
WEC, in most cases, purchases the projects in concert with another utility and the two share the power generated by the project. Madison Gas & Electric partnered with WEC on three of the projects and will receive 50 megawatts from Two Creeks, 100 megawatts from Badger Hollow and 31 megawatts from Paris Solar-Battery Park.
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WEC and Alliant, which provide electric and natural gas service to millions of Wisconsinites, expect their efforts to get a boost from green power intitiatives that will be pushed President Joe Biden’s administration. Already, Biden has rejoined the Paris Climate Agreement and issued executive orders to “supercharge” the nation’s effort to combat climate change during his first days in office.
The administration in January announced plans to invest billions of dollars over the next decade in clean energy and battery storage technology, and to work with industry and agriculture on innovations like carbon-capture technology in a way that creates millions of good-paying, manufacturing jobs producing clean energy technology for the world. Utilities said those efforts are vital to their own plans to cross the carbon-neutral finish line in less than 30 years.
“Several of the administration’s actions reinforce Alliant Energy’s commitment to a clean energy future, including our continued investments in cost-effective renewable energy for our customers and advocacy for electric transportation,” said John Rainbolt, Alliant’s director of federal affairs.
Tom Content, executive director of Wisconsin’s Citizens Utility Board, said the transition has had a dramatic effect on utilities, one that should benefit customers.
“I think it’s just really interesting and dramatic how much this industry that plans for the long term is almost being upended and transformed more rapidly than it’s ever been,” Content said. “In some respects, that’s a really good thing. Public opinion aligns with environmental issues. They prefer clean to dirty energy.”
Yet, some consumer and environmental advocates worry about how much of the cost of the transition will be passed on to customers in the form of rate hikes, while also wondering whether the utilities could pick up the pace.
Even as solar parks and wind farms are adding clean, renewable megawatts to the grid, coal and natural gas plants still make up the lion’s share of power generation.
Those sources accounted for almost 7,500 megawatts of WEC’s 8,900-megawatt energy portfolio in 2020 and 5,800 of Alliant’s 7,000-megawatt portfolio, as of 2019. Those figures only refer to the power generating sources the utilities own and operate, not energy they purchase from other companies.
The utilitties’ greenhouse gas emissions have declined largely due to a transition to cheaper natural gas, but fossil fuel-buring plants continue to generate about three-quarters of the state’s electricity, leaving them with a lot of work to do, said Scott Blankman, director of energy and air programs for Clean Wisconsin.
“What we’ve seen is coal has gotten smaller and natural gas has grown, but the majority of our energy production still comes from fossil fuels,” Blankman said. “We are supportive of what WEC and other utilities have done to move to a carbon-neutral future faster and glad to see they’re embracing the technologies that can get us there.”
Balancing Interests
Utilities face a delicate balancing act in pursuit of these goals. They have to maintain enough capacity to meet customer demand and deliver that service reliably. And since the sun doesn’t always shine and the wind doesn’t always blow, utilities say multistate power grids and improvements in battery storage are keys to smoothing out fluctuations in renewable electricity generation.
It will take innovation in areas like battery storage, billions of dollars, time, coordination and planning to reach net-carbon-neutral power generation by 2050. That’s a challenge utilities across the country are dealing with, said Emily Fisher, general counsel and clean energy policy lead at the Edison Electric Institute.
It is important to note that carbon neutral does not mean zero carbon emissions. The change from coal to solar, wind and other sources can put a major dent in carbon emissions. Remaining emissions would be offset by investing in projects to remove an equal amount of greenhouse gas from the atmosphere. It could be reforestation projects, a cogeneration plant to produce heat and power at once or investing in biodigesters to capture methane.
Members are committed to getting as clean as they can as fast as they can, but also have to keep their eye on affordability,” Fisher said. “And we also have to keep an eye on reliability. We can incorporate a lot more renewable energy into the grid, but it would be expensive and not as reliable as we’d like it to be.”
That challenge played out, in part, in Texas last week, where cold weather crippled local power production and the state is not set up to draw power from other regions in an emergency.
How they’re doing
Right now, 26% of the electricity WEC customers consume comes from renewable sources that include wind, solar, biomass and hydroelectric dams, the company said. For Alliant customers, it’s about 34%.
WEC and Alliant determine how they’re doing by the change in emissions since 2005, their baseline year.
WEC has cut its greenhouse gas emissions by 30%, from 35.8 million metric tons in 2005 to 25.1 million metric tons in 2019. Alliant’s carbon dioxide emissions are down 35%, to 14.1 million metric tons, in that period.
In that time, Alliant and WEC have slashed sulfur dioxide emissions 97.8% and 90% respectively, and reduced nitrogen oxides by 85.7% and 82%. Both companies’ mercury emissions are down 95%. This was accomplished through the installation of pollution controls on power plants, the shutdown of some coal-fired plants and the introduction of cleaner natural gas-powered reciprocating internal combustion engines in some facilities.
WEC’s renewable power sources grew from a little under 7% of its owned portfolio in 2016 to almost 9% in 2019, before new solar and wind projects in 2019 and 2020 pushed the total well past 10%, to 17%. The figures are lower than the overall percentage of electricity that comes from renewable sources because utilities purchase additional electricity beyond what’s generated at plants they own. WEC, for example, purchases electricity generated at Point Beach Nuclear Plant by the plants owner, NextEra Energy.
Busy years ahead
WEC has budgeted $2 billion in solar, wind and battery storage as part of a $16 billion, five-year capital improvement plan for the next five years, while Alliant plans to spend $2.2 billion over the next five years on “smarter and more resilient energy infrastructure.”
Their combined plans to shut off thousands of megawatts of coal-fired capacity and replace them with solar parks, wind farms and battery storage will help move the utilities much closer to getting a majority of their electricity from renewable sources.
For example, WEC’s plans to shut down 1,800 megawatts of coal-fired capacity and add several solar parks by 2025 would leave it with 1,750 megawatts of coal-fired capacity and close to 1,700 megawatts of solar, wind and other renewable sources.
The larger-scale solar parks like Two Creeks and Badger Hollow will be supplemented by pilot projects developed in concert with companies, nonprofits and government agencies.
Alliant said power generated by customer-owned renewable resources doubled from 58 megawatts in 2015 to 117 megawatts in 2019, the bulk of it coming from solar installations.
WE Energies has been working on a pilot program called Solar Now that seeks partners for solar panel installations on rooftops and vacant land.
The company has completed 11 Solar Now pilot projects and has another six in development. It recently partnered with Harley-Davidson to install nearly 8,400 solar panels on the roof of Harley’s Menomonee Falls factory. The panels can generate 2.25 megawatts, enough to power about 400 homes.
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“Solar, for our companies that operate here in Wisconsin, is well-suited to provide the energy needed when it’s needed most,” Liu, WEC’s CFO, said. “It’s a valuable resource for us in that area which we’ve seen play out in investments already.”
Brown County is among those organizations that are eager to invest in renewable resources. The county installed solar panels outside its sheriff’s office and at the STEM Innovation Center, completed in February 2020. County Executive Troy Streckenbach said the county is eager to deploy more renewable resources.
“We own a lot of land. We have a lot of rooftops, a lot of buildings. If the technology is there and return on investment is there, we’re interested,” Streckenbach said. “We hope this has the byproduct of saving taxpayers money, cutting our long term costs and protecting our environment.”
Future savings?
The investment in new renewable energy and retirement of fossil fuel-burning plants will cost billions, but utilities say it will save customers money in the long run.
“This ESG progress plan, ultimately, will provide very significant customer savings. I don’t want that to be lost,” Liu said. “It’s the foundation for us: To put forth a very aggressive emission reduction plan. Reduce carbon. Work with stakeholders, including regulators and environmental groups while we deliver value to customers.”
One of the big savings will come from no longer buying the natural gas or coal needed to fuel these plants. Liu said customers also will benefit from declining operating expenses.
“To maintain aged coal units you’d have to spend incremental capital just to make sure they’re okay to operate,” Liu said.
Blankman, at Clean Wisconsin, said he expects the cost and effort of completing the transition will increase now that utilities have shut down their older, least efficient plants and installed pollution controls on others. What’s left are large plants like Columbia, Weston, South Oak Creek and Elm Road in Oak Creek, that provide a lot of megawatts of electricity and most of the remaining greenhouse gas emissions.
“A lot of low-hanging fruit has been retired. Now you’re left with the big ones,” Blankman said. “And as you retire them, you’ll knock off chunks of emissions. It’s where we want to accelerate that and take bigger chunks of emissions out.”
Content, with the Citizens Utility Board, is concerned about the consumer cost of the construction of solar, wind and battery projects, as well as the cost of retiring the coal-fired power plants that Wisconsin utilities continued to build into the 2000s.
“The challenge, as we see it in the clean energy transition, is what to do about these costs for coal plants that are no longer needed and being replaced. It’s the real story behind an affordable clean energy transition and a costly one,” Content said.
One solution to the cost issue could be a process called securitization, a refinancing mechanism that, until now, has only rarely been used in Wisconsin.
Securitization, as it pertains to power companies, is a process in which a utility issues bonds for the remaining value of all or part of a coal plant. The bonds have a lower interest rate than the utility’s allowed rate of return, set by the Public Service Commission, allowing them to count the difference as savings that can be passed on to customers.
Last year, the Public Service Commission approved WEC’s request to securitize $100 million of the remaining cost of environmental controls that had been installed at the now-closed Pleasant Prairie Power Plant. Over the life of the bonds, WEC expects to save $40 million in financing costs, savings that will be passed on to customers.
Content said it was the first time a utility has used the process since the state Legislature approved it 15 years ago. One of the drawbacks of Wisconsin’s securitization law is that it can only be applied to the cost of pollution controls, not the plants themselves.
“Other states are more aggressive on securitization,” Content said. “We’d like to see that explored further. We need to explore every available option to reduce the costs.”
The last 20%
Existing options for carbon-free power generation can help WEC and Alliant achieve their 2030 goals of further emissions cuts, but getting all the way to carbon-neutral power generation will require technology and equipment that doesn’t yet exist or needs further development.
“Environmental organizations, utilities, consumers, we all need to acknowledge this last 10% to 20% is going to be perhaps the most difficult,” Blankman said. “It’s where our focus needs to be, on that last 10 to 20%, and how we get there as quick as we can without costing anyone a significant amount.”
Fisher, the Edison Electric Institute’s clean energy policy lead, said battery storage, in particular, will be a key to reaching 100% carbon neutral generation, along with advancements in nuclear power plants.
Large-scale energy storage helps provide reliable electricity for times when there’s not enough sunshine or wind to meet energy consumption. Right now, grid-level large-scale electric energy batteries can store enough power for hundreds or thousands of homes, but they run out of power in hours, not nearly long enough, Fisher said.
“We’re working on efforts to identify, and partner with governments, on those technologies. We don’t necessarily know what technology breakthroughs will come,” Fisher said. “It does seem like the last little bit will be more challenging. But between now and 2030, we have the tools to continue to make significant progress.”
