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Xcel Reveals Winds of Change

To get a sense of the progress that's been made in wind energy in the last 10 years, the numbers paint an impressive picture. According to the American Wind Energy Association (AWEA), America's cumulative wind-power capacity exceeded 61,000 megawatts in 2013---a nearly tenfold increase from 2003 capacity levels. Almost 80 percent of states now generate power from wind resources, according to the AWEA, with enough capacity to power the equivalent of 15.5 million homes.

Today, wind power makes up 15 percent of the energy supply that Xcel Energy provides to customers and can meet the energy needs of about 2.5 million homes. At one point in May 2013, wind accounted for more than 60 percent of the power on the Colorado system, setting the national record.

This commitment to wind has helped Xcel Energy earn its standing as the No. 1 wind-energy provider for 10 consecutive years in the AWEA's annual utility rankings. More importantly, wind energy benefits Xcel Energy customers. It helps to diversify our energy supply and reduces system emissions. Wind purchased under long-term contracts protects customers from rising fossil-fuel and environmental-compliance costs.

We've learned plenty about wind energy in this last decade. As we ramp up our solar capabilities, our wind power experience offers constructive insights to help further reduce our carbon footprint, maintain system integrity, and continue to meet customer demands for more renewable energy at an affordable price.

Providing lower-cost clean energy through economies of scale
Xcel Energy plans to expand the use of wind energy by 40 percent during the next several years. What's driving this growth? If you think it's just to help fulfill state renewable-energy standards, you'd be wrong. At current prices, wind is simply proving to be the lowest-cost option for meeting our customers' energy needs. Last year, for example, we received bids to purchase new wind power from projects that offer prices below those of new natural gas generation.

Today's large wind farms and individual turbines are strategically placed in locations with proven, reliable wind resources. These facilities use taller turbines with lighter and longer blades that are designed to capture and generate the most electricity from available winds.

Similar efficiencies are driving down the cost of large-scale solar. According to the Solar Electric Power Association, the use of large-scale solar energy has continued to increase, averaging 58 percent annual growth in the last two years---and the price is dropping. The U.S. Department of Energy's SunShot Initiative reported that utility-scale solar project costs decreased 48 percent between 2010 and 2013.

Large-scale solar facilities are being built in ideal locations that offer the strongest solar resources. These facilities incorporate advanced technologies to track and produce the most energy from available sunshine, helping to drive down the cost of the energy produced. In fact, large-scale solar projects are about half the cost of rooftop solar and can produce up to 50 percent more energy panel for panel because of these efficiencies.

Improving the predictability of variable resources
Xcel Energy began a multi-year project in 2009 with Global Weather Corp., an affiliate of the National Center for Atmospheric Research, to develop a highly detailed wind forecasting system. Through this work, we now use advanced wind production forecasting to help determine wind conditions 24 hours or more in advance. This allows us to identify what other energy resources are needed to work with wind production on the system.

As a result, our forecasting error rate has been reduced by almost 37 percent, and we estimate saving customers about $37.5 million in fuel costs since implementing the project. More accurate wind forecasts have improved the integration, efficiency and cost of wind energy on our system.

Building on this experience, we have embarked on a new phase of the project to develop sophisticated solar forecasting. The goal is more precise forecasting that better predicts the clouds, aerosols and irradiance that influence solar production, particularly from distributed solar resources that sit behind the customer's meter. As our customers continue to adopt on-site solar installations, more accurate weather forecasts can help us plan and integrate these resources onto the utility system in a way that reduces costs and emissions for all utility customers.

Utility rules and rates must evolve with the changing energy landscape
Wind power today is a low-cost, competitive energy source, but it is only one component of our broad energy portfolio. We still require reliable electric capacity that can be dispatched to help balance rapid changes in wind output caused by the variability of weather. This balancing capacity is not free.

Xcel Energy filed a request in May with the Federal Energy Regulatory Commission for new wind integration charges in Colorado that will allocate wind costs more fairly. As transmission-only customers add more wind to our Colorado system to serve their customer loads, it is important that the costs associated with integrating this wind power are paid by transmission-only customers. Currently, these costs are spread among all Xcel Energy residential and business customers.

Solar presents a similar challenge. Nearly all customers with rooftop solar installations remain connected to the grid to sell their excess energy and buy energy when their systems aren't producing enough. However, under current net metering policies, solar customers avoid paying their share of costs to maintain the utility grid they use. This leaves non-solar customers to pick up the entire cost of the grid.

Xcel Energy has stressed the importance of ensuring grid costs are appropriately allocated among both solar and non-solar customers, and we will continue to explore solutions with the Colorado Public Utilities Commission and interested stakeholders in 2014. Similarly, we are working with stakeholders in Minnesota to assure the state's developing solar program provides an opportunity for interested customers to obtain solar energy in a way that treats all customers fairly. 

Looking to the future, we see solar and wind as key components in our strategy by not only providing cost-effective energy to our customers but also supporting our efforts to reduce carbon emissions. We announced the addition of 2,000 megawatts of renewable energy in 2013, with wind accounting for more than 90 percent of it. And our renewable energy sources already have us exceeding our target of reducing emissions 20 percent by 2020 over 2005 levels. In fact, current projections put us at a 31 percent reduction by 2020, which means we are set to achieve President Obama and the U.S. Environmental Protection Agency's 30 percent carbon-reduction goal 10 years early.

Solar holds tremendous potential for our nation's energy future, and we're approaching it with the same determination that made us the country's top wind provider. As customer interest in renewable resources continues to grow, Xcel Energy is responding. We are demonstrating that with the right projects, operating practices and rules, wind and solar resources are essential contributors to a reliable, cost-effective and cleaner energy system.


Frank Prager is vice president of policy and strategy at Xcel Energy.

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