Wisconsin’s largest utility plans to replace nearly half its coal-fired generation with a portfolio of solar, wind, batteries and natural gas plants as part of a $16.1 billion spending plan that the company says will generate profits for investors and save money for ratepayers.
WEC Energy Group plans to retire 1,800 megawatts of fossil fuel generation — including the South Oak Creek coal plant near Racine — over the next five years while adding 1,500 megawatts of clean energy and storage capacity along with 300 megawatts of natural gas generation.
Utility chairman Gale Klappa announced the capital plan during a call with investors Tuesday, in which he said it would help WEC meet its goal of carbon neutral electricity by 2050 and achieve a 55% reduction in carbon emissions by 2025.
Klappa said the spending plan, which is $1.1 billion larger than the previous five-year plan, will increase company profits by 5% to 7% a year while also saving ratepayers what amounts to $50 million a year over the next two decades.
In broad terms, the plan calls for building 800 megawatts of solar generation and 100 megawatts of wind generation coupled with 600 megawatts of battery storage, which can be used to balance those intermittent renewable resources.
“The data show that battery storage has now become a cost-effective option for us,” Klappa said.
The announcement comes as Wisconsin’s first utility-scale solar plant came online. Jointly owned by WEC subsidiary Wisconsin Public Service Corp. and Madison Gas and Electric, the 150-megawatt Two Creeks Solar Farm in Manitowoc County began commercial operation Monday.
Jointly owned by Wisconsin Public Service Corp. and Madison Gas and Electric, the 150-megawatt Two Creeks Solar Farm in Manitowoc County began commercial operation Monday, according to the utilities.
WEC also intends to purchase a 200-megawatt share of Alliant Energy’s new West Riverside natural gas plant and build 100 megawatts of natural gas-powered peaking plants.
The company said those acquisitions will allow it to retire the 1,100-megawatt South Oak Creek power plant, whose four generators are all more than 50 years old, in 2023 and 2024.
WEC’s oldest coal-fired plant, South Oak Creek is the single largest source of toxic metals dumped into Lake Michigan, according to a Chicago Tribune analysis of federal data.
Last year, the Department of Natural Resources gave WEC until the end of next year to stop using water to remove ash from the boilers, a process that can lead to mercury and other toxins seeping into groundwater.
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South Oak Creek is the third-largest coal-fired plant in Wisconsin, behind WEC’s 1,200-megawatt Elm Road station and the 1,100-megawatt Columbia power plant near Portage, which is jointly owned by WEC subsidiary Wisconsin Public Service Corp., Alliant Energy and Madison Gas and Electric.
Klappa said closing an older plant like South Oak Creek could save $50 million a year in operational and maintenance costs.
WEC spokesman Brendan Conway said natural gas generators at the Weston and West Marinette power stations would be retired as soon as 2023, and the company will identify another 300 megawatts of coal capacity for retirement next year.
The plan drew praise from the Sierra Club, which has argued the utility could save ratepayers millions of dollars by shutting down its coal plants.
“It feels like a tipping point,” said Elizabeth Katt Reinders, “This is a massive shift for the state’s largest utility. … It feels very vindicating of the analyses we’ve been bringing before regulators across the country.”
The news also drew praise from a coalition of neighbors and community leaders who have been calling on WEC to close the plant.
Sister Janet Weyker, co-founder of the Dominican Eco-Justice Center, which is about three miles from the plant, said the decision to close the plant “will cut air, water and climate pollution that have harmed our community for years.”
“As the transition to clean, carbon-free energy continues,” Weyker said, “we must stay committed to closing Wisconsin’s remaining fossil fuel-powered plants, supporting a just transition for workers, and ensuring that the benefits of this plant retirement are passed on to ratepayers.”
Who pays for unneeded assets?
Consumer advocates cautioned that ratepayer savings will depend on how regulators handle the hundreds of millions of dollars WEC has invested in fossil fuel plants over the past two decades.
“We know that investors and citizens and others want a clean energy transition,” said Tom Content, executive director of the Citizens Utility Board. “The issue is how much should customers have to pay for plants that aren’t needed to keep the lights on.”
On Thursday the Public Service Commission approved a plan for WEC to refinance $100 million of its remaining investment in pollution controls at its Pleasant Prairie coal plant, which WEC retired in 2018 saying it would save millions of dollars for ratepayers.
The financing arrangement, known as securitization, is expected to save ratepayers about $40 million.
Consumer and environmental advocates, as well as regulators, say securitization could be a key tool for paying off plants that are no longer economic to run.
“It worked well here,” said Commissioner Ellen Nowak. “It may work well in the future.”
Despite attempts by the Trump administration to prop up the coal industry, South Oak Creek is the 329th U.S. coal plant targeted for retirement since 2010, according to the Sierra Club.
Over the past decade, U.S. utilities have retired or replaced 95,000 megawatts of coal-fired capacity in response to tighter air pollution standards and increasingly unfavorable economics, according to the Energy Information Administration. Another 25,000 megawatts of coal capacity are expected to retire by 2025.
In the first six months of 2020, the U.S. electric power sector consumed 30% less coal than in the first half of 2019, according to recent data from the EIA.
Wisconsin utilities have shuttered 12 coal generators in the last five years with a combined capacity of 2,300 megawatts, though coal remains the state’s single-largest source of energy, contributing about 45% of the electricity generated within the state.
Alliant Energy, which plans to add 1,000 megawatts of solar generation in Wisconsin, this year has announced plans to close its 415-megawatt Edgewater plant in Sheboygan by the end of 2022, while the company’s Iowa utility said last month it would also close a 275-megawatt coal plant in Lansing on the Mississippi River.
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