Talk to Bob Tutkowski about the operations of the Elm Road Generating Station in Oak Creek or walk around the power plant with him for even a few minutes and it becomes clear why coal plants require tens of millions of dollars in maintenance annually. It’s not that the plant appears to be in disrepair – far
Talk to Bob Tutkowski about the operations of the Elm Road Generating Station in Oak Creek or walk around the power plant with him for even a few minutes and it becomes clear why coal plants require tens of millions of dollars in maintenance annually.
It’s not that the plant appears to be in disrepair – far from it. The two Elm Road units, which have a combined generating capacity of 1,268 megawatts, are the newest coal power plants in the state.
The reality is bringing 17,000 tons of coal to the site by train seven or eight times per week, moving that coal into storage and then into silos, grinding it into a talcum powder-like consistency, blowing it into a furnace and igniting it to boil water to create steam to move a turbine to power a generator to create electricity involves a lot of moving pieces.
And all that doesn’t even address the process of condensing the steam back into water or the steps the utility goes through to remove nitrogen oxide, sulfur dioxide and ash from the plant’s emissions.
“You’re seeing pretty much just water vapor,” Tutkowski, asset manager for the Elm Road plant at We Energies, said of what emerges from the plant’s chimney.
Coal power plants have gotten cleaner. The biproducts of coal combustion used to end up in landfills. Now, ash is captured for use in concrete, and exhaust gasses are combined with limestone to create gypsum used in drywall and agricultural applications. Some old ash is even being reclaimed from landfills and burned again because new technology allows for more complete combustion.
A plant like Elm Road takes time to develop. The utility submitted its application to the Wisconsin Public Service Commission in 2001 and the units went into service in 2010 and 2011. It also takes money, like $2.3 billion to build, and millions more to expand coal storage and fuel flexibility.
But even with cleaner burning coal power plants, the future of energy generation for Milwaukee-based WEC Energy Group is in other sources. The company, the corporate parent of Wisconsin Electric, Wisconsin Gas and Wisconsin Public Service Corp., has set a goal of cutting its CO2 emissions by 80% by 2030 compared to 2005 levels. It already met its original goal of cutting those emissions by 40% in 2019, a decade ahead of schedule.
“When we set the targets, we thought we were very aggressive, but we’ve been able to achieve those and more,” said Scott Lauber, senior executive vice president and chief operating officer of WEC Energy Group.
As recently as May 2018, WEC had an “aspirational” goal in its investor presentations to have coal, natural gas and carbon-free energy sources each generate a third of its electricity in 2030. WEC now estimates just 8% of electricity will come from coal that year, down from 73% in 2005.
To get there, the company is retiring older coal plants and investing in renewables, targeting them to be 39% of the electricity supply. In total, WEC plans to build or buy 1,800 megawatts (MW) of solar, wind and battery storage capacity, with about 76% of that announced so far, including 975 MW of solar, 316 MW of battery storage and 82 MW of wind, a $1.9 billion investment to date.
The plan has taken major steps forward this year with WEC announcing a total of $1.37 billion in investments to buy three solar and battery storage projects being developed by Chicago-based Invenergy. Madison Gas & Electric will also have an ownership stake in the Paris, Darien and Koshkonong projects, which are located in Kenosha, Walworth and Rock, and southeastern Dane counties, respectively.
WEC’s filings for the existing projects suggest another solar and battery project is planned.
WEC Energy Group electricity supply by fuel type
A rapid and complex transition
The shift away from coal, and towards solar, is a dramatic change for WEC.
In the summer of 2007, Wisconsin Electric sought permission from the PSC to build significant new emissions controls on the Oak Creek Power Plant, a much older coal power plant that started operating in 1959 and is located just south of the Elm Road plant on the same site.
Without the new controls, the utility faced the prospect of shutting down the Oak Creek plant by the end of 2012 because of a consent decree with the EPA. In its application, the company said the facility still had another 20 to 25 years of useful life remaining.
Had the plant been retired, Wisconsin Electric would have needed to replace more than 1,000 MW of generating capacity. Company officials said their modeling suggested installing the controls would save customers more than $600 million over options that involved retiring the plant.
The transcripts from the PSC case for the project barely make any mention of renewables as an option to replace the aging plant. When they did come up, wind power was the primary option. Solar barely receives a passing mention.
The PSC ultimately approved the $875 million project, and the systems were placed in service in September 2012.
WEC Energy Group now plans to retire the Oak Creek Power Plant’s two generating units in 2023 and 2024, three to nine years earlier than the remaining life from 2007 would have suggested. The move is part of the massive remaking of the company’s power generation mix (see chart).
But what does it matter where the utility gets its power from? If the lights go on when the switch is flipped, why should a business or residential customer care?
From a global perspective, consumers are increasingly concerned about climate change and want to see their power coming from clean sources. Investors have also taken a greater interest in environmental, social and governance issues, shaping where companies are choosing to spend their money.
“It’s all adding up to a host of pressures that folks who don’t change will be left behind,” said Tom Content, executive director of the Citizens Utility Board of Wisconsin.
Reliability is also an issue. How can solar provide power when the sun goes down? What happens if the wind doesn’t blow? Coal may come with environmental issues and higher operating and maintenance costs, but as long as the company has supply and stays on top of repairs, it is always available to heat water, create steam and power a generator.
And beyond the environmental and reliability factors, business and residential customers ultimately care about the cost of their electricity.
“Everybody has sustainability goals these days; the concern is we all still need competitive rates,” said Todd Stuart, executive director of the Wisconsin Industrial Energy Group, an organization made up of the 25 largest energy customers in the state. “For my members, (energy is) usually in the top three costs of doing business.”
WEC’s modeling suggests the remaking of its electricity generation could save customers
$880 million.
Retiring the Oak Creek plant – and with it tens of millions in annual operating, maintenance and fuel costs – will help generate the savings. The same is true for the Wisconsin Public Service stake in an Alliant Energy coal plant in Columbia County. The utilities will also avoid future capital spending to keep the aging plants operating.
However, the projected savings come against maintaining the status quo, not some other mix of new investments in renewable technologies or other ways of reaching emissions goals.
WEC’s focus is on reducing carbon coming from its generation fleet, but if the state and its residents are looking to do the same, the cheapest way would be to use less energy, said Content, whose organization advocates for individual consumers and small businesses.
“We think there’s opportunities for savings in the clean energy transition, but it has to be done in a thoughtful way and in a thoughtful way that goes beyond just what the utility’s proposing,” he added.
There is typically a rate increase following new construction, Stuart said.
“We need to be really careful to avoid unnecessary rate increases and avoid rate shock in the coming years,” he said.
WEC was due to have its rates reviewed by the PSC this year but reached a “stay out” agreement with stakeholder groups. The agreement’s conditions included WEC filing its next rate case by May 2022, setting the stage for important issues to be discussed next year.
If $1.9 billion in renewable investments weren’t enough to prompt questions from stakeholders, the utility is also still recovering the costs from the emission controls project at Oak Creek and, as authorized by the PSC, earning a profit on that investment.
The exact amount of costs left to recover on the Oak Creek plant is unclear. When the Pleasant Prairie coal plant, which received significant upgrades in the 2000s, was retired in 2018 it still had $645 million to recover. The Oak Creek costs could be in the same neighborhood.
“One of the lynchpins to help ensure a more cost-effective clean energy transition is to find a way to reduce those costs,” Content said.
One option is environmental trust bonding, which was used on $100 million of the Pleasant Prairie costs to save consumers an estimated $40 million. Lauber said a similar approach might be possible for the Oak Creek plant, but Stuart also noted using the tool is voluntary.
“A utility is not obligated to use it,” he said.
Using it on Pleasant Prairie was part of a settlement and didn’t cover all the costs.
Alliant Energy is using a levelized return to recover costs for its Edgewater 5 plant, which will shut down next year. Also part of a settlement, the approach cuts the utility’s return from 10% to effectively 9.2%, and Lauber said it could be a possibility.
Investors and the utility put money into the Oak Creek emissions projects as long-term assets, he said, and the question now is how to get an appropriate recovery when the right decision is to retire an older unit.
“I don’t think it’s right for us to look at it and say ‘we could save our customers maybe some money and clean the environment, but let’s wait until these assets run the entire end of their life,’” Lauber said.
Another issue facing ratepayers and the company is the cost of nuclear power supplied to WEC from the Point Beach plant in Two Rivers. Wisconsin Electric sold the plant to what is now NextEra Energy in the mid-2000s. The price of energy from the plant, part of an agreement negotiated with the sale, had increased 1% annually for most of the past decade, but it is now increasing 6% per year.
The result is more than $800 million in additional minimum contracted costs above the 2018 level through 2025. The rate of the yearly increase climbs to 7.15% in 2026, pushing costs higher.
“It’s not sustainable,” Content said. “We don’t have a silver bullet for that, but it’s something we have to keep discussing and try to find an answer to.”
WEC officials pointed out that the sale of the nuclear plant also generated $900 million in bill credits for customers after the sale. It also provides a carbon-free energy source for nearly 20% of electricity sold by WEC.
Why solar and where?
For anyone familiar with the varieties of Wisconsin weather, the fact that WEC is investing billions into solar may come as a surprise. The Badger State, after all, is not sunny California or Arizona.
However, “we have a pretty good solar resource in Wisconsin, believe it or not,” said Dan Krueger, executive vice president of planning at WEC Energy Group. “Our solar resource is just as good as Florida’s because we don’t have the cloud cover at peak hours like Florida has.”
Southern Wisconsin, in particular, has one of the strongest solar resources in the state because of its latitude and weather patterns, Invenergy officials noted in documents for the Paris solar project.
“Solar has been a great fit for us because it generates at the peak hours when we need it most, and it saves customers the most money,” Krueger said.
Matching the energy generation to the times when it is needed is a key part of why WEC is able to shift to a more diverse mix of sources. Hot summer days that require lots of electricity to run the air conditioning often come with plenty of sunshine to generate power with solar panels.
In contrast to the continual maintenance of a coal plant, solar projects require less upkeep. In its application to develop one project, an Invenergy affiliate noted that, based on average precipitation in the area, regular cleaning of the solar panels wouldn’t be needed.
Other maintenance might include replacing air filters, testing connections, battery replacement and minor greasing of gearbox parts. The ground cover maintenance would include mowing, although the application left open the possibility of using grazing livestock.
WEC has invested far more in solar and battery projects this year than in wind.
“Wind is good; it’s not great,” said Krueger, explaining that solar projects leave some gaps as demand ramps up in the mornings and again in the evenings. Using fossil fuel plants to fill the need wouldn’t meet the clean objectives of the company, but wind couldn’t reliably meet the need either.
That’s where battery storage enters the picture, a component of each of the solar projects announced over the past year. The solar panels will charge the batteries ,which will then supply power when the sun goes down and in the mornings.
Wind is playing a role in other parts of WEC’s business. The company has invested more than $2.3 billion in eight wind projects across Illinois, Nebraska, South Dakota and Kansas. Those projects will provide power to the likes of Google, Facebook, Verizon, AT&T and Allianz for at least a decade.
“The day may come when we seek to have more wind in Wisconsin. It just has to fit what our load is evolving to at that time,” Krueger said.
But the solar projects have had some complications.
Opponents of the Koshkonong project have sought the recusal of a PSC commissioner for previously advocating for the project and taken issue with Invenergy developing the project and then selling it to the utilities, claiming the entities are skirting regulatory processes and requirements.
Those issues are in addition to more common complaints about large projects, including how solar panels might change the view for a rural homeowner.
In the Kenosha County town of Paris, some neighbors expressed concern about drainage issues, interference with satellite television reception, the cost of installing barriers to block the view of solar panels, the industrial look of battery units, potential increased fire risk and noise levels.
Others saw it as a positive step toward addressing climate change, which one landowner described as the most critical threat to “our way of life.” Supporters and those leasing their land for the projects also noted the value of providing income to farmers and preserving farmland for potential future use.
WEC officials point out that the owners of the land where the panels are actually placed enter into lease agreements with the company willingly.
Krueger said the company is open to dialogue with those who are concerned and noted the PSC requires the projects to have 125% of the needed land to allow for compromises.
“No one likes anything in their backyard,” said Lauber. “It’s a challenge across the industry and across others too.”
What about future technology?
Advancements in technology and declining costs of solar are two of the reasons WEC has been able to move so quickly from aspiring to reduce coal to a third of electric supply to targeting just 8% of its supply from coal in 2030.
Krueger said individual solar panels have gone from 300 watts to 500 or 600 watts, with the possibility of 1,200 watts, all from the same size panel.
“It is incredible when you look at the solar cost curves,” Lauber said. “We looked at solar before, but it was just so cost prohibitive it didn’t make any sense.”
“Five years ago, we would have never thought about batteries, and now they’re there,” he added.
Of course, those kinds of advancements and having gone from barely mentioning solar to building multiple utility-scale projects begs a question: Should ratepayers be concerned today’s investments will be obsolete in 10 years?
“Looking forward, because of the way technology continues to advance, it makes it harder,” Content said. “Are we locking ourselves into a technology that’s not the right one, that’s not going to be the winning technology 10 years from now?”
Lauber acknowledged technology advances quickly, but also said the near decade before WEC wants to reach its emission and generation mix targets is a long time.
“You can’t wait for it,” he said of technology, adding that as solar advances the company will have an option to install more efficient equipment during maintenance cycles.
Krueger said the “incremental evolution” of solar, wind and batteries could play a major role in WEC hitting the emissions targets and its longer-term goal of net zero CO2 emissions by 2050.
“The future is very encouraging,” he said, describing the existing renewables as proven and constantly evolving.
Liz Stueck-Mullane, vice president of environmental at WEC, also pointed out the company is investing in wider industry research efforts aimed at a low-carbon future. She highlighted carbon capture and hydrogen as two areas of interest.
In the late 2000s, the utility ran a successful test to capture carbon emissions from its Pleasant Prairie plant. The issue, however, remains the cost of what to do with the carbon once it is captured.
“Regionally, we’re not in an area where you can store it because you need a geological formation to be able to do that, or you have to pipe it, you have to take it somewhere,” she said.
Stueck-Mullane said hydrogen, particularly the green variant which comes from renewables, is also a key area. The issues include making it cost effective and the safety considerations of an odorless, colorless and flammable gas.
Krueger also noted hydrogen has about one-third the energy content of natural gas, so utilities will need to study how it can operate within their systems.
There’s also the possibility of more distributed energy generation through solar, including on the rooftops of homes and businesses. A recent PSC study suggested it is technically feasible to install 39 gigawatts of solar on Wisconsin rooftops by 2034, although just 1.6% of that would likely be installed under the study’s simulations.
“More companies are evaluating behind the meter generation. You will see some larger solar projects built by the customers coming online in the very near future,” Stuart said, suggesting the projects would be five or 10 megawatts or even larger.
“Utilities may want to evaluate how to better partner with large customers for their sustainability goals,” he added.
WEC does have two programs to work with businesses wanting to generate solar power. The first is Solar Now, which allows a company to host up to 2.25 MW of solar and receive a lease payment from the utility. The other is the Dedicated Renewable Energy Resource program or DRER, in which a customer pays for the costs of new renewable generation and the utility makes payments based on energy production.
At the same time, there are questions about how customers can add their own solar.
The city of Milwaukee sought to work with Iowa-based Eagle Point Solar to put solar on seven city-owned properties. Wisconsin Electric denied Eagle Point’s interconnection request, and the issue ended up in court and is being contested at the PSC.
One of the main issues in the case is whether the arrangement between Eagle Point and the city would make the former a public utility. Eagle Point argues it is providing power only to the city, not the entire public.
Wisconsin Electric says it is not trying “to stop the development of solar or the ownership of distributed generation by its customers,” contending that Eagle Point is asking the PSC to approve “a new regulatory model for third-party electric generation facilities in Wisconsin.”
Whether residential consumers should be incentivized or more readily be able to add solar to their homes is among the questions shaping the transition to renewable energy. WEC officials emphasized that would distort who pays for the reliability of the grid, pushing costs toward those who cannot afford their own solar.
“The cost of maintaining the grid is spread across all customers based on usage, so someone who puts a solar panel on their house and reduces their usage while the cost of maintaining a reliable grid hasn’t gone down, all the wires, all the generators are still out there, so that balloon gets squeezed just a little bit towards everyone else,” Krueger said.
He added that consumers across the state have invested in the grid and WEC’s utilities have been recognized regionally and nationally for their reliability. The utility-scale projects WEC is pursuing also offer economies of scale and come in at “a tremendously lower cost.”
“We truly benefit, and that benefit flows to all the customers, not just those who can afford to put their own rooftop (solar) on their building or their house,” Krueger said.
Content noted that not having to pay up-front costs by renting or leasing solar would open the technology to more people and make it more cost effective.
“There is a value to the grid and the other customers on the grid of more solar, whether that’s built by homeowners or small businesses or the utility itself,” he said.
The role of coal
So where does all of this leave Bob Tutkowski and the 160 people who work at the Elm Road Generating Station? For now, part of their focus is on a once-per-decade project to take one of its turbines completely apart for inspection and repairs. It’s a big undertaking that requires an eight-week outage for one of the units.
Longer term, he acknowledged the role of Elm Road in WEC’s system will likely change and the plant will run less than it does currently.
“How it will change each individual job, that’s yet to be determined,” Tutkowski said, noting the first step will be to work through the retirement of the nearby Oak Creek plant.
At the same time, the Elm Road plant offers reliability, which is part of how WEC has gone about planning its power generation mix.
“The nice thing about the coal-fired power plant, we have the coal pile reserves right here, so we’re able to withstand the trains that get interrupted coming from the west or the east, a derailment someplace,” Tutkowski said.
Company executives have said it is possible the plant could be converted to natural gas.
“There’s a lot of optionality there, so we’ll continue to evaluate that,” Lauber said.
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