When it comes to reducing greenhouse gas emissions in the U.S., the private sector is playing a bigger role than ever before, and that goes for some energy providers, too. Among them is Xcel Energy, the first major U.S. utility to pledge to go entirely carbon-free.
In this edition of Columbia Energy Exchange, host Bill Loveless sits down with Ben Fowke, the chairman, President and CEO of Xcel Energy, which in December announced a bold commitment to provide 100% carbon-free electricity to its customers by 2050. Not only that, but Xcel also set a goal of cutting the company’s carbon emissions by 80% by 2030, compared to 2005 levels.
Since then, other utilities have also unveiled major carbon-cutting initiatives. Among them Idaho Power and Public Service Company of New Mexico, with goals of 100% carbon-free electricity by 2045 and 2040, respectively.
Ben doesn’t pretend that achieving Xcel Energy’s goals will be easy and he tells Bill why. Nevertheless, he’s confident that the Minneapolis-based company, with 3.6 million customers in Colorado, Michigan, Minnesota, Texas and four other states, is off to a good start.
Bill caught up with Ben while he was in Washington to testify on energy storage before the Senate Energy and Natural Resources Committee. They talked about his company’s ambitious carbon agenda, including its growing reliance on renewable energy and its movement away from coal for electric generation.
They also discussed the role that natural gas and nuclear energy will play in Xcel’s resource plans and the challenges of finding the technologies necessary to make carbon-free electricity a reality for Xcel and other utilities.
Not surprisingly, the Green New Deal came up in their talk as did proposals for a carbon tax and other options for policymakers to consider in addressing climate change.
Bill Loveless: When it comes to reducing greenhouse gas emissions in the United States, the private sector is playing a bigger role than ever before. And that goes for some energy providers too. Among them is Xcel Energy. The first major U.S. utility to pledge to go entirely carbon free. Hello and welcome to Columbia Energy Exchange. A weekly podcast from the Center on Global Energy Policy at Columbia University. From Washington, I’m Bill Loveless. Our guest today is Ben Fowke, the Chairman, President and CEO of Xcel Energy which announced a bold commitment back in December to provide 100% carbon free electricity to its customers by 2050. Not only that, but Xcel also set a goal of cutting the company’s carbon emissions by 80% by 2030, compared to 2005 levels. Since then other utilities have also unveiled major carbon cutting initiatives. Among them Idaho Power and Public Service Company of New Mexico with goals of 100% carbon free electricity by 2045 and 2040, respectively. Ben doesn’t present that achieving Xcel Energy’s goals will be easy and he tells me why. Nevertheless, he’s confident that the Minneapolis based company with 3.6 million customers in Colorado, Michigan, Minnesota, Texas and four other states is off to a good start. I caught up with Ben while he was in Washington to testify on energy storage before the senate energy and natural resources committee. We talked about his company’s ambitious carbon agenda, including its growing reliance on renewable energy and its movement away from coal for electric generation. We also discussed the role that natural gas and nuclear energy will play in Xcel’s resource plans and the challenges of finding the technologies necessary to make carbon free electricity a reality for Xcel and other utilities. Not surprisingly, the green new deal came up in our talk as did proposals for a carbon tax and other options for policy makers to consider in addressing climate change. Well, here is our conversation. I hope, you enjoy it. Ben Fowke, welcome to the Columbia Energy Exchange.
Ben Fowke: Well, thanks. I’m glad to be here, Bill.
Bill Loveless: Well, Ben, I always like to start with get to know the person a little better for our audience and when I was looking back on you, I read where, you’re an accountant, financial accountant by training.
Ben Fowke: Yeah.
Bill Loveless: One who a few years ago told a Minneapolis TV station that you never thought, you’d head up a major company and that you were still learning about energy. How did you get involved in energy?
Ben Fowke: Well, you’re right. I never thought, I would head a major utility company coming out of college. I was, this was in the early 80s and you might remember, it’s a pretty tough economic times then. So, I was just interested in landing a job and, you know, support a family and I started out in accounting and finance. Ultimately, took a job down in Florida for a company that’s now known as Next Era. My role was more focused on non-utility things Next Era was doing some good, some not so good. And working through some of those issues and helping develop the ones, the opportunities that were there and that ultimately led to another job with a company that is now became Xcel Energy and I’ve used my finance and accounting skills to move up in the organization and, you know, along the way, I really fell in love with energy. You know, it’s, you know, I hate that saying but I’m gonna use it anyway though. It’s not your grandfather’s utility and there is so much change and really the importance of energy in our modern society and how much we depend on it and sometimes take it for granted but it powers everything and it’s changing. I think, changing for the good and these are really exciting times to be in the utility. So, I’m really honored to lead the 11,000 men and women that I’m privileged to lead.
Bill Loveless: Well, talk about change. You have quite a bit of change underway, these days with Xcel. Let’s start about talking about these ambitious goals, aspirations that you announced just a few months ago.
Ben Fowke: Yeah, in December of last year, we announced that and we were the first utility in the nation to do it. We announced that we wanted to be completely carbon free, 100% carbon free electricity by 2050. And just as importantly, our interim goal that we would reduce our carbon emissions by 80% by 2030. Now, Bill as of today, we are just a tad under 40% carbon reduction based upon 2005. So, we are gonna double down on that by 2030 and then go all the way by 2050.
Bill Loveless: Right, right. Well, what prompted this? I mean, what gave rise to this plan?
Ben Fowke: Well, we’ve been involved with the clean energy transition really since the late 90s, early 2000s. Some of that quite frankly were, you know, regulatory mandates. Others were voluntary programs as we had, you know, early customers that wanted to be more renewable. But along the way, increasingly, technology was getting better and better and this was becoming economically possible. You combine that with the climate change science that says early action is incredibly important. We actually took it upon ourselves to work with the University of Denver and modeled how our plans would fit in to the degree scenario and it would fit in very well. Utilities basically build, need to do more because they can, it’s not easy. But we can do more than other sectors. So, you’d combine the fact that I think it’s the right thing to do. I know, that our communities and customers want it. But particularly want it if they can stay affordable and reliable. And that’s where the third thing comes in and that’s the incredible pace of technological change that allows us to incorporate renewables, move away from coal, even natural gas which we also have on our portfolio. Far less expensive today than it was ten years ago. So, if it’s economically possible, then we were really excited about it. That was the basis of our announcement.
Bill Loveless: Yeah. What might your portfolio look like, a generating portfolio look like in say 2030 compared to what you have today?
Ben Fowke: Well, renewables will be our biggest source of energy mix by next year, not over 50% but it will be the largest. By 2030, I think we’ll have about 60% of our energy coming from renewables. The other balance will be our nuclear fleet which we think is very important to preserve and of course, we are gonna have energy storage. We are gonna have increasingly energy efficiency, demand response and as I mentioned natural gas.
Bill Loveless: And you’re expediting the closure of coal power plants in your system.
Ben Fowke: In the upper Midwest, we have just recently announced in our plans that we filed in the upper Midwest that we are gonna accelerate the retirement of our two remaining coal plants, Midwest by 10 years. So, that will mean that we will be completely out of coal by 2030. In Colorado, we’ve already announced the retirement of two of our coal plants. And we are looking to do other things in Texas and New Mexico as well working with our communities and our regulators and frankly employees, right in journey.
Bill Loveless: Well, we talked a little bit about, you know, 2030. Before we get to 2050 and that’s the big one with a certain amount of optimism but I take it, there is a certain amount of acknowledgment that it’s a tough one to reach. But first, a lot of what you’re talking about is consistent with the Paris climate accord. I mean, how big was that in your corporate thinking?
Ben Fowke: You know, the thing to me is, I wasn’t particularly, my plans didn’t change much when we joined the Paris accord. They didn’t change when we left it. But I do believe that we need to listen to our scientists, when it comes to climate change and the risk of it and you know, it can be different parts of the debate whether or not man is, how much influence man is having on climate change? But to know the risk. It doesn’t make a lot of sense to me, particularly when we can do something about it affordability and reliability. It might now take discipline, it takes public policy. But you know, Bill, I think back to the, remember the issue, the environmental issue of the 80s? It was ozone. We were both around, right. It was the ozone and remember, some people said, we really don’t need to do anything. I give credit to the Reagan administration. They said, let’s do something. Let’s take out an insurance policy just in case the scientists are right. I think we’re in the same situation today. It’s unfortunate that you know, this has become a partisan issue. It should be a bipartisan issue. We are starting to see that change a little bit. That’s really wonderful. And you know, the Paris accord, back to your initial question is about what climate scientists are telling us and I think, you need to listen and we are.
Bill Loveless: And to think a mistake for the U.S. to step away from the Paris agreement?
Ben Fowke: Well, you know, I try not to get involved in that political debate. You know, I try to focus on what’s good for my community, my customers, what they want and you know, what our regulators want and you know, things that the federal versus the global level can work themselves out.
Bill Loveless: Right, right. Do you find that, you know, this point of view that you have in these discussions that you have are typical of what you hear from your peers when you go about the utility industry? You’re active in the Edison electric institute for example, the association.
Ben Fowke: I can’t be more proud of our industry and not only how we are addressing climate change but how we do it in a way that’s respectful and knows that it’s disruptive to the communities that are seeing their coal plants move away. Our employees are very proud of what they’ve contributed and those jobs are going away. Our industry is doing a great job reducing carbon. Increasingly more and more are gonna do even more and so, I’m glad to help encourage that and lead that. But the utility industry, I think is very unique in our ability to address this risk and do so in a way that maintains an affordable product, a reliable product and is works with the community, make sure this transition happens in a way that is least disruptive as possible.
Bill Loveless: Let’s talk about 2050. That’s, as we were saying a minute ago, that’s a, it’s a pretty big aspiration. What’s necessary for you to meet that? Do you have a good idea today of how you’re going to meet that and how likely are you to do so?
Ben Fowke: I have some idea. You know, I’m not gonna ever bet against technology and again, we’ve talked about that but just, let’s just talk about what we’ve seen already. Ten years ago, is buying wind at three times the price, I’m getting at today. And large scale solar was, you know, four or five times the price I’m getting today. And natural gas was four times the price. So, technology has come a long way. I think technology will continue to come a long way and give us those economic technologies. So, I know, how we are gonna get to the 80% goal. We are gonna do that as I mentioned 60% renewables, while natural gas, nuclear will obviously promote energy efficiency and we’ll use storage wherever we can. But that last 20% is, that’s the toughest 20. Where will it come from? Well, I think, you need to be technology agnostic. I had the chance today to talk about the need to put more research dollars into things like energy storage.
Bill Loveless: You testified today before the senate energy committee.
Ben Fowke: Right, right. But I think it could be the next generation of nuclear. I think it could be the next generation of carbon capture, particularly in _____ [00:12:35] combustion and Bill quite frankly, it could be that the hydrogen economy finally comes to be viable. And I say that because if you look at the opportunity to create hydrogen using electrolysis powered by renewable energy or using the process in our nuclear plants with called steam reclamation, you can basically produce a renewable hydrogen fuel that can be stored obviously and it can be used in fuel cells, maybe with modifications into our existing gas plants. It’s dispatch able. Because the key is for that last 20%, after we put as much renewable as we can on the grid, you’re gonna want dispatch able energy. To deal with the kinds of planning scenarios, the weather events, the reliability situations that we need to make sure we are covered on.
Bill Loveless: Right, I was reading in a report that your company has on its website building a carbon free future that you said, “fully relying on renewable energy.” Let me say that again, “Fully relying on renewable sources could result in a costly over building of the system where each incremental mega watt provides less capacity value. Retail renewable curtailments reach high levels and massive investments in transmission and storage would be required. You said, we need a suite of new carbon free resources that can be dispatched to complement our continued adoption of renewable energy, energy efficiency and demand response.”
Ben Fowke: And I still stick with that quote. You know, once you get to a certain saturation point on the big grid, it starts becoming very, very expensive to do more and you then have to start worrying about reliability issues as well. So, and I think, Bill one thing I think is important to point out, what we are trying to do is something that’s sustainable and others can do and there is a lot of misinformation about a 100% renewable. To me the goal is a 100% carbon free. But you know, we want to work with a business, yourself if you were interested in our customer, communities to be a 100% renewable. But ultimately what we are doing is, we are sinking to the big grid and while we have ways to go, I’m thinking about that point where we have more renewable on that big grid that we are all part of than we are able to economically or operationally handle.
Bill Loveless: Right, right.
Ben Fowke: And that’s what that quote represents.
Bill Loveless: Yeah. What do you think of the green new deal?
Ben Fowke: Well, you know, I think…
Bill Loveless: It’s an aspiration.
Ben Fowke: Yeah. People like to say, it’s an aspiration. I think, you know, you have to really, I really like to focus on things that are pragmatic. There is a lot of different assumptions around the green new deal. Maybe not a lot of details. What I’m offering here is a detailed planned on how we get there.
Bill Loveless: Right. You know part of your portfolio going forward is natural gas and there are folks these days even some who are running for president, who say,, you know, we need to get off fossil fuels. We can’t treat it as a bridge which is what so many people have thought of natural gas as being today. What do you think of gas going forward?
Ben Fowke: Well, I do think it’s an important part of the mix. 2050 is a few decades away and we all still need affordable, reliable energy, that’s dispatch able piece, you know, it’s the best technology, most economic technology we have today. We are moving away from coal, you know, natural gas is 50% of the carbon content. Maybe, it will be natural gas blended with hydrogen that way ultimately used. Maybe it will be hydrogen itself. I think there have to be modifications to the gas plants. But those people that want to keep fossil in the ground, they have to understand the risk they are taking is that if we have a major reliability issue in our country then I think the clean energy transition is gonna come to a screeching halt and people are gonna say, I told you so. And so, you’ve got to have a pragmatic implementation plan that get you to a vision that I think we all can rally around.
Bill Loveless: Right. How likely are you that, you think you’ll meet that 2050 goal? You said you’re optimistic. As it is.
Ben Fowke: Yeah, I am, again, I don’t bet against technology. And I’m very certain with the right public policy, we’re gonna hit that 80% carbon reduction. Let’s just say, we stop there. Let’s just say the guide post of reliability and affordability say, you couldn’t go anymore now. I don’t think that’s what, it’s gonna happen. But think about what we can do that energy product now in other sectors of industry. Starting with the transport sector. You know, I mean, that alone will make a big difference. I think, we are gonna do more. I think, we are gonna get to that goal. But if we fell short, you’re still gonna have a product that is you electrify other things is gonna reduce carbon and do so in a way that is affordable.
Bill Loveless: Are your peers coming to you and saying, okay, maybe we’ll do something like that? I mean, we’re likely to see many in the way of copycats going forward.
Ben Fowke: I don’t think to call my peers copycats. We all work together. I think we all know the importance of what we provide to society. But since, I made the announcement, two other people have already, you know come forward with it and what we are trying to do is as an industry is really have people understand that you want to work with your utilities. Utilities are the best position group to achieve these kinds of goals with responsibility that’s always with us to provide affordable and reliable energy. So, you know, maybe I’m leading the way but others are close behind and others in my industry are doing really good work. Again, as I mentioned to you at the onset of our interview, I’m proud to be part of this industry.
Bill Loveless: Right. What’s been the reaction of different constituencies to the company’s goal for reducing carbon emissions? Wall Street for example are regulators of large industrial consumers.
Ben Fowke: By and large, very supportive and I think when you, even for some people that are, you know, are a little bit cynical, when you say, we are not gonna do this, if it’s not affordable and we are not gonna do this, if we can’t provide reliable power. They tend to get more comfortable with it and to me, that’s the pragmatic approach.
Bill Loveless: That reliability issue is key to the discussion.
Ben Fowke: Reliability is key and affordability is key. You know, product became expense, then when I get excited about the opportunity to electrify other sectors that I’d be less excited. Right, I mean, today, if you fill up your car with electricity versus gasoline, it’s the equivalent of a dollar gallon of gasoline. And yet, it’s 70% carbon reduction that’s today. I’m looking forward to 2030, where it will be a 90, 95% carbon reduction.
Bill Loveless: What sort of feedback are you getting from the communities with the coal plants because you are, you know, your plans are to shut down the rest of them?
Ben Fowke: That’s a very good question. Again, this is where I think utilities are very uniquely positioned because we have been serving our communities for so long. But let me give you some examples of that. Listen, first of all, it’s never an easy message. It’s not an easy message for communities. It’s not an easy message for employees. So one other things you want to do is get along the runway. We are talking about, you know, giving notice of 8 to 10 years. That gives us on the employee side time to retrain our employees. Many of them are gonna retire in a time frame. We’ve got a retiring workforce. That’s a whole another podcast.
Bill Loveless: Topic for another day.
Ben Fowke: But on the community side, I’ll give you an example of what we did in Becker, Minnesota where we announced retirement of now three coal plants. We told the community that we double down on our economic development efforts with them and we brought a Northern Metals recycling unit to the community on a site that we helped to provide. And just recently Google announced that they were gonna build a data center using that same infrastructure and on site that we helped them provide and if things go right, it will be the first of many data centers that we hope they build. So, that preserves tax base and creates an economic development and actually think the community is pretty excited about where we are going with the future and that’s kind of, that’s important that you do recognize that you have to help the community through transition. You have to help your employees through transition.
Bill Loveless: Right, right. Because that seems to be Ben, one of the biggest worries and perhaps holds in the argument in recent years, generally, I think across the country is, you can talk about the movement away from coal but sometimes people, especially from the coal community feel as though they have been left behind.
Ben Fowke: Absolutely. And you know, again, I think we all recognize that we need to do everything we can to minimize that.
Bill Loveless: You know, you’re seated here in Washington of course. You’ve been on Capitol Hill today. There is the question and always especially for us at the center on global energy policy of what is the role of energy policy in these matters. Michael Gerard who is the founder and director of the Saban center for climate change law at Columbia University was on the podcast with Jason Bordoff and he was saying that there is a need for investment in public works to bring about this, to meet these goals for carbon reduction in the United States. Private investment alone is not enough.
Ben Fowke: Well, that’s a very good point. You know, I will tell you, the utilities are very good at raising capital. We are a capital intensive industry. If we get support of regulatory support, I think, we can come a long way where I say to answer your question, the role of the federal government is to help us with that the necessary research. You know, we are not, utilities aren’t R&D specialist and we can take a technology and power it. But if we do our jobs right, we kind of move it along with the speed of value. Because again, we have a duty to keep it affordable and a duty to keep it reliable. So, there is a great partnership, you know, let’s support our labs. Let’s invest in storage. Let’s focus on long term duration storage. Let’s find those next technologies. Let’s innovate on nuclear and when I say innovate on nuclear, I mean not only the technology itself but the regulation that will come with this next generation which should be a lot different than the last generation. Let’s…
Bill Loveless: Nuclear, will you keep your nuclear plants alive?
Ben Fowke: Well, first of our nuclear plants the license, our Monticello license expires in 2030. So, we are asking for life after 60 on our Monticello plant and that’s part of a plan that we put in front of our regulators this Minnesota in the upper Midwest to say, hey look, as we move forward with closing our coal plants, we are gonna need to preserve those nuclear plants. 2030 is right on our doorstep. Now, we have two other units that have expiring licenses in 33 and 34. So, we have a little more time there. It’s, but we think that it’s, you want to keep that option alive.
Bill Loveless: Right. That’s not the case in some places where the plant, nuclear plants are simply no longer economic to operate.
Ben Fowke: Well, but you know, that gets, when you look at what’s happening there, these are deregulated markets where you’re selling into the market and we’re resiliency, diversity, and long term planning. Unfortunately are built into those market mechanisms. So, gas trumps off. You know, and of course you don’t want to have all your eggs in one basket. We all learnt that really in our kindergarten, I think, I think our mothers told us that. So, it applies to your energy mix as well.
Bill Loveless: Right. But in your market, those plants are still economic.
Ben Fowke: Yeah, as a matter of fact, our plants and I speak for the industry now. The plant are, nuclear plants are operating more efficiently than they ever have and you know, to build a new solar plant, cost about $40 a mega watt hour levellized over the life of the project. To keep your nuclear plant running, it’s about $32. So…
Bill Loveless: So, it depends where you are in the country. What type of market, you’re in.
Ben Fowke: Well, you wouldn’t do either perhaps in those deregulated markets that I talked about. But when you’re looking long term, you want to have it, that diversity and that resiliency.
Bill Loveless: Right. You were talking about government investment in technologies, different kinds, carbon capture and sequestration is getting a lot of attention these days. Even direct carbon capture, what do you think of these technologies and the outlook for them?
Ben Fowke: Certainly, the early days of pre-combustion carbon capture haven’t been particularly successful. But there is a lot of promise with post combustion, the allam engine for example which is a, you know, a gas fired technology that captures carbon. I think it shows some real promise. Again more to come on that, you know, how you store, you know, eject carbon into the ground. I mean, right now, most of that is be used for enhanced oil recovery. But if we can, if we can solve that problem and make it economic, I’m all for it.
Bill Loveless: And it seems as though it would be a consideration for you as you think about how long you are gonna keep your natural gas plants operating?
Ben Fowke: It’s true. Again, it might be, you know, it could be that technology, it could be a capturing technology that we don’t know about yet. There is a lot of development around that or it could be perhaps the use of hydrogen.
Bill Loveless: Yeah. What about a price on carbon? Not to get into a lot of discussion, economists love it and politicians seem to hate it. What about businessmen like you?
Ben Fowke: It’s tough to price to make our product more expensive. But you know, we bake in a cost of carbon in our state processes. You know, so, it’s a consideration to look at.
Bill Loveless: How much is that?
Ben Fowke: It depends on the locality and there is some discussion to make that price higher. The problem, I think you have, the devil is always in the detail for these things and a straight up carbon tax, it could make this transition very expensive. I guess, I like the carrot more than the stick though.
Bill Loveless: Right and that’s the premise of the plan.
Ben Fowke: That’s the premise of the plan. That’s the promise of the government helping with research. That’s the idea of the government encouraging through tax incentives. With the understanding that as the technologies become, you know, move from nascent to prime time, that those incentives can go away.
Bill Loveless: You know, you’re again on the hill today. Ben, do you get a feel, you’re in Washington, you’re in and out of Washington, I imagine fairly regularly and maybe a better judge of the political climate here than those of us who live here. I mean, what’s your impressions today as you sat through this hearing as you talked to people on the hill? Your impressions on where the politicians are on or maybe to put where the politics are on climate change here?
Ben Fowke: Well. So one of the things that I have said and we have talked about it that I don’t think there is risk should be a partisan debate. I think it’s a bipartisan risk that we need to solve and we need to approach it like we would any other business risk. Technology is helping us do that. You bridge a lot of gaps when you say, you can do this with affordability and reliability. And so what I heard today is that increasingly, I think people are willing to work across, to address this risk. And again, our customers want us to do it. Our communities want us to do it. But they do want our products to be affordable and they sure want it to be reliable.
Bill Loveless: Important message going forward.
Ben Fowke: You got it.
Bill Loveless: Ben Fowke, thank you very much for joining us on Columbia Energy Exchange.
Ben Fowke: It’s my pleasure, thank you.
Bill Loveless: Well, that’s our conversation. I hope, you enjoyed it. For more on Columbia Energy Exchange and the Center on Global Energy Policy, find us online at Energypolicy.columbia.edu or on social media at Columbiauenergy. For Columbia Energy Exchange, I’m Bill Loveless. We’ll see you next week.