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Major Utilities Buying More Wind as Economics Drive US Energy Transformation

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Across the nation, smart business leaders are doubling down on wind power because new business realities are driving an energy marketplace that is more diversified and flexible.

Clean power sources, such as wind, solar and natural gas, are now customers' preferred energy choices. And this new energy mix is actually improving America's grid, adding resilience and reliability, along with more than half a million U.S. jobs, while saving U.S. energy customers and ratepayers billions of dollars in electricity costs.

Last Friday, we heard more good news. Reports on DOE's draft grid study confirm what major utilities have been saying with their wallets: "The power system is more reliable today" and "significantly higher levels of renewable energy can be integrated without any compromise of system reliability."

America's utility leaders are continuing to make that case in word and deed.

On June 12, Gerry Anderson, chairman & CEO of Detroit-based DTE, detailed plans for this leading Midwestern utility to add 6,000 MW of renewable power, including wind and solar, 3,500 MW of natural gas and also modernize its electric grid. As Anderson explained, it’s part of DTE’s transition away from coal generation that will be complete by 2040.

Image Left: DTE CEO Gerry Anderson

My former boss said DTE will ultimately generate 75 percent of its power from renewable energy and natural gas, in a plan he said will "deeply decarbonize DTE Energy... in a way that was affordable." He said that utilities' trend away from coal will continue "even with the current federal policy on climate. The Administration can't turn a 70-year-old coal plant into a 20-year-old coal plant. In the long term, electricity wins." [Emphasis added]

Anderson’s comments echoed those made just eight days earlier by Nick Akins, who heads American Electric Power (AEP), one of the nation's largest utilities.

Image Left: AEP CEO Nick Akins

Akins committed to "continuing on our path of moving to a clean energy economy," notwithstanding President Trump's announcement about withdrawing from the global climate pact.

Akins said AEP's plan in the next few years "certainly is driven by renewables... solar, wind power and then backed up by natural gas-fired generation." He cited dramatic changes to the economics, including "the lowering cost of renewables" and natural gas, as compared to coal-fired facilities, which are "much more costly."

'Economics Are Driving What's Happening in the Industry'

On July 6, Minnesota's Public Utilities Commission approved Xcel Energy's plans for the largest wind energy expansion to date in the upper Midwest. It is part of Xcel's initiative to add 3,000 MW more wind, bringing its total to 10,000 MW.

"That's going to have us at 35 percent of our energy mix from wind," said Xcel Energy CEO Ben Fowke.

"Economics are driving what's happening in the industry,” Fowke said. By 2021, Xcel expects wind to be its largest energy source — not just in capacity, but in generation.

"What's even more amazing is the price. We're looking at [prices] in the low teens to low 20s [in dollars/MWh] — not starting prices, but levelized across the 25-year life of the project. That beats gas, even at today’s prices. I like to say we backed up the truck because the fuel of tomorrow was on sale today," he said.

Chris Brown speaks to Xcel CEO Ben Fowke at WINDPOWER

"Everybody benefits." Consumers get lower cost and Xcel earns a return for building wind projects.

To supplement wind as the grid’s largest energy source, Fowke said Xcel plans to add gas peaking plants and "baseload coal will probably be replaced with combined cycle [gas plants]." He expects this transition to continue whatever the policy environment in Washington, D.C.

Let’s be clear: None of these utility leaders are strangers to burning coal.

They're among the growing class of energy business CEOs making decisions on the basis of their shareholders and also ratepayers.

These utility leaders are all buying wind and solar power now because those energy sources are winning on price and integrating fine with the grid.

The growth of clean power as a mainstream player in America's energy mix is a business reality that won't be denied. The business leaders in America's power sector are pretty clear about what direction makes the most economic sense.

Those who take the time studying the status, security and evolving nature of the nation's power grid are wise to pay attention to those who actually buy electricity production and manage its business realities every day.

America is winning with wind energy.

Lead image: Wind turbines in South Plains, Texas. Credit: Vestas

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