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Midwest utilities craft ambitious renewables, coal-retirement plans to meet goals

Highlights

Six utilities plan $15.6 billion in spending

Coal retirements expected to reach 5.8 GW by 2023

Clean energy plans could 'escalate' under Biden

Houston — Six Midwest utilities have said they expect to spend more than a combined $15 billion over the next several years to install or buy roughly 4 GW of solar generation, more than 3.6 GW of wind generation and just over 1 GW of electric battery storage.

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Each of the utilities also said during third quarter 2020 earnings presentations that they intend to continue to retire long-held coal-fired capacity as they pursue carbon reduction targets that in most cases they have set for the years 2025, 2030 and 2050.

The six Midwest utility holding companies -- the WEC Group, which serves mainly Wisconsin, Alliant, which serves both Wisconsin and Iowa, Xcel's Minnesota utility subsidiary, Michigan's CMS Energy and DTE Energy and Ameren Energy based in St. Louis, Missouri -- reported Q3 earnings in the last week of October and the first week of November and said they expect to retire a combined total of 5.8 GW of coal-fired capacity by the years 2022-2023.

The utilities, which have a combined current generating capacity of 46.3 GW, are looking to replace their 5.8 GW of coal-fired capacity with 7.7 GW of new solar and wind over the next few years.

While the combined total of future renewable investments among the six utilities came to $15.6 billion, the way they described their investments differed.

WEC said it has a 2021-2025 capital plan for investing in its "efficiency and sustainability drives" that totals $16.1 billion, with "sustainable renewables" getting $4.1 billion of that total. The WEC Group also told analysts that it would be "allocating $1.9 billion for regulated renewables investing in carbon-free generation."

Ameren Energy, which in September filed its 2020 integrated resource plan with Missouri state regulators, said it was aiming at 3,100 MW of wind and solar generation by 2030, "representing an investment of approximately $4.5 billion." After 2030, the company said, it will bring the total amount of renewables to 5,400 MW with a total investment of $8 billion.

Plans of 6 Midwest Utilities to Use More Renewables and Retire Coal
New Solar
New Wind
Battery Storage Coal Retirements
WEC Group
800 MW
100 MW
600 MW
1,135 MW (by 2023)
Alliant
400 MW
1,150 MW
NA
275 MW (by 2022)
Xcel Minnesota
460 MW
650 MW
NA
682 MW (by 2023)
CMS Energy
1,100 MW
NA
450 MW
544 MW (by 2023)
DTE Energy
545 MW
225 MW
NA
2,410 MW (by 2022)
Ameren
700 MW
1,550 MW
NA
812 MW (by 2022)
Total
4,005 MW
3,675 MW
1,050 MW
5,858 MW (by 2023)
Source: S&P Global Platts compiled from company Q3 2020 earnings reports

A Biden win could 'accelerate' plans

One of the bigger news items to come out of the earnings calls was DTE's announcement that it will "spin-off" of its midstream natural gas business, which has 1,450 miles of gathering lines and 91 Bcf of regulated gas storage capacity in Michigan.

Company executives said that it chose not to sell the unit, but rather wants to see it become a separate, publicly traded company.

Those same executives also said they want to "transform" DTE's remaining electric and gas utilities into "pure play" regulated businesses.

The Midwest utility holding companies painted a mixed picture of electricity demand trends in Q3.

Alliant said it saw retail power sales continue to lag in Q3 despite a roughly 2% year-over-year increase in residential sales. The Madison, Wisconsin-based Alliant saw its two utilities' retail sales for the first nine months fall 2%, with residential sales increasing just over 1%.

Alliant not only laid the blame for its Q3 retail electricity decline on COVID-19, but also on the derecho that hit Iowa in August.

Ameren Missouri reported a Q3 residential sales increase of 2% compared to Q3 2019, but its commercial sales were down 7.5% while industrial sales were down 0.5%. The utility reported a total sales decline of 2.5% for the quarter.

The Jackson, Michigan-based CMS Energy, however, told analysts that its electricity sales "recovered" in the third quarter 2020 with a year-over-year increase of 0.5%, which was led by a 6% increase of higher margin residential sales.

The CMS and utility subsidiary Consumers Energy president and CEO, Patti Poppe, told analysts the company's next Integrated Resource Plan will be filed with Michigan regulators "mid-year 2021," and it will be "in support of the governor of Michigan's initiative on carbon neutrality."

She noted that Michigan Governor Gretchen Whitmer, Democrat, signed an executive order on Sept. 23 calling for the state's economy to be carbon-neutral by 2050.

Poppe, who said on Oct. 29 that the company was "agnostic" about the outcome of the presidential election, nonetheless also said that if former Vice President Joe Biden were to win the election and put in place a clean energy policy, CMS's solar and storage plans could be "accelerated."

One utility holding company whose Q3 2020 projections are not included in the data from the six other utilities is Columbus, Ohio-based American Electric Power.

During its Nov. 6 earnings call, AEP said it is planning to spend $2.8 billion on regulated renewable generation with $2.1 billion in investments geared toward contracted renewable projects.

Nicholas Atkins, the AEP chairman, president and CEO, said that AEP's plan is to invest 14% of its capital through 2025 in renewable energy "within and outside our traditional service territory, and we project renewables will represent approximately 40% of our fuel mix by 2030."