Following Zero-Carbon Pledge, Xcel’s Colorado Chief Acknowledges Importance of Natural Gas, Challenges of Renewables

Xcel Colorado President Alice Jackson clarified some points about the feasibility of achieving a 100 percent carbon-free electrical power grid by 2050 and acknowledged the role that natural gas has in providing reliability during a panel at the Colorado Oil and Gas Association’s Energy Summit in Denver on Tuesday.

The panel examined the future of natural gas in the midst of a growing renewable energy economy.

“In December of last year after a number of years of research and looking at the reliability of the system, can you operate a system that has high levels of renewables on it, what does that look like, is it economic for the customers—we made a pretty bold announcement,” Jackson said, “We announced that we would achieve an 80 percent carbon reduction on our system from 2005 levels by 2030, and we will be heading towards a zero-carbon system by 2050.”

As Jackson mentioned, late last year, Xcel pledged to deliver 100 percent carbon-free electricity to its customers by 2050.  The move was lauded by several high-profile Colorado officials, including Gov. Jared Polis (D) who made reaching a 100 percent renewable energy mix by 2040 a major tenant of his 2018 campaign.  But in the months since the announcement, Xcel talked openly about the challenges renewables face in generating necessary baseload energy to dependably serve customers and maintaining reliability in times of extreme weather conditions.

“The grid can’t be 100 percent renewable,” Xcel CEO Ben Fowke told Minnesota public-utility regulators in May. “That last 20 percent [from 80 percent to 100 percent] has to be carbon-free, and it has to be dispatchable.”

Fowke emphasized the importance of maintaining a stable grid with a reliable underlying power source, “If we don’t have [grid] reliability, then the clean-energy transformation comes to a screeching halt,” Fowke said.

Jackson reiterated this sentiment in her remarks.

“Now very clearly, you did not hear me say we would be 100 percent renewables on the system.  And there are reasons for that even though renewables have come down dramatically in price,” Jackson said.

“When we did our research and we did our analysis we said you have to broaden the scope of resources you can use to meet that zero-carbon future.  And that zero-carbon future means that we’re not talking just about renewables because things happen, such as polar vortexes and bomb cyclones.”

Jackson was referencing the rough weather that ran through two of Xcel’s largest service regions last winter.  Colorado experienced what was deemed a “bomb cyclone” in March which brought severe winds and snow, while Minnesota endured a “polar vortex” where temperatures plummeted, and wind chills reached 60 degrees below zero.  Jackson pointed out that in such extreme temperatures, the lubrication on wind turbines freezes.

That’s why Jackson said the December announcement included within it the two very important “guardrails” of reliability and affordability.

“If we’re not keeping the lights on, we’re not doing our job,” Jackson said.

“Right now in the state of Colorado, my residential customers enjoy rates that are roughly 38 percent below the national average.  My commercial and industrial customers enjoy rates that are 20-25 percent below the national average.  We kind of like those numbers. We like being competitive.”

Jackson attributed the rates to natural gas prices which have remained steadily low combined with falling prices for renewables.

But Jackson was sure to distinguish between the two pledges Xcel announced last year.  While the utility is confident it can reach its 80 percent carbon reduction over the next decade, addressing the remaining 20 percent is less certain.

“What I can tell you is that up to 2030, we know that the existing technologies that we have available wind, solar, the existing battery storage, albeit with limitations, those types of technologies can get us to the 80 percent carbon reduction in a cost-effective manner,” Jackson said.

“Beyond 2030 we’ve been really clear.  We’re betting on technology.”

The variability that renewables bring to the system is why dispatchable energy sources like natural gas are still needed to ensure baseload power to customers.

Jackson added that she didn’t necessarily know what the technological landscape will look like that would produce a zero-carbon dispatchable resource, but implored the audience to embrace innovation in order to get there, adding that Xcel isn’t a “research and development organization” and must rely on the commercial scale technology that is available.

“We’re looking at an all of the above strategy.  If somebody can bring me a zero-carbon dispatchable resource, that is what we need on our system,” Jackson said.