- WEC Energy Group, a major Midwestern utility, on Tuesday unveiled a series of new and more aggressive environmental goals. The Wisconsin-based power company says it is committing to a 60% reduction in carbon emissions at its electric plants by 2025, relative to 2005 levels, and an 80% drop by 2030. That’s up from its previous goal of 70% by 2030, with the utility last year having pledged to become net carbon neutral by 2050.
- WEC says it plans to reach those targets in part through a $16 billion-plus capital investment plan, detailed in a newly released report on the company’s environmental goals. The plan calls for billions in investments in renewable energy projects.
- Analysts say the new goals propel WEC into the forefront of utilities with major commitments to phasing out fossil-fuel based power in favor of cleaner energy sources. However, WEC also faces pressure to completely phase out its remaining coal-fired plants, despite a pledge to reduce coal-fired generators to 10% of its overall asset base by 2025.
WEC, in a plan released Tuesday, said it plans to spend $16.1 billion over the next four years to reduce its carbon emissions and meet its environmental goals.
Under the capital plan, outlined in a “Pathway to a Cleaner Energy Future,” WEC will spend $4 billion through 2025 on new, renewable energy generating projects.
The investments include 1,800 MW of new, renewable power sources, including new battery storage capacity of 600 MW. In a first step, WEC said it filed plans earlier this year with the Public Service Commission of Wisconsin to build and open by 2023 two new solar and battery storage projects, including 185 MW of battery storage to provide a four-hour block of energy after sunset.
“We're making really good headway on our capital plan,” said Gale Klappa, WEC’s executive chairman, in a conference call with analysts.
That is “pretty sizable spending” compared to its peers in the utility industry, said Matt Kasper, research director at the Energy and Policy Institute.
And WEC’s goal of reducing carbon emissions by 80% of 2005 levels by 2030 is particularly notable, he said. The decision by WEC to raise this interim goal comes in the wake of a decision last year to push to reach net carbon neutrality by 2050, up from a previous goal of reducing emissions by 80% of 2005 levels.
“That puts them in the top tier … with NIPSCO and Xcel,” Kasper said. “I would say on the electric side, those are pretty big things.”
Andrew Bischof, senior equity analyst at Morningstar, offered a similar assessment.
“It’s definitely a significant amount,” Bischof said. “That would definitely put [WEC] among the top of its peer group among production targets.”
WEC received mixed grades, though, for its pledge to reduce coal-fired power plants to 10% of its asset base by 2025.
Klappa, WEC’s chair, said the utility plans to initially focus over the next few years on shutting down its less-efficient coal-fired plants.
EPI’s Kasper said the goal fell short of outlining a roadmap for completely sunsetting coal, which his group and environmental advocates are keen on.
Instead, WEC, in its environmental goals report, seems to hold out hope for being able to hang onto its more modern coal-fired plants, which were built less than a decade ago.
WEC, in the report, said it hopes that new technology — and in particular “carbon capture, utilization and storage,” or CCUS — might provide a way to keep these plants on the grid “assuming the technology is developed further.”
Morningstar’s Bischof, who tracks the utility industry, sees WEC’s move to reduce its reliance on coal-fired plants as “directionally positive,” especially given the rising costs of running these facilities.
Still, Bischof said he can understand the reluctance to move faster on this front given the need to maintain reliability, especially during challenging weather conditions.
The Morningstar analyst noted that WEC executives, in a recent conference call, said they needed all their generating plants, including their coal-fired units, operating at full capacity to meet demand during the February cold snap that wreaked havoc in Texas.
“You saw what happened in Texas if you don’t have your whole portfolio running in high peak,” Bischof said.
WEC is also getting mixed grades for pledging to achieve “net-zero” methane emissions from its natural gas distribution network by 2030.
The pledge comes as WEC continues to expand its natural gas network, with the Energy & Policy Institute and environmental activists pushing for the conversion of residential homes to electricity from gas, a fossil fuel, Kasper said.
“They get a majority of revenue from the gas distribution side — they want to continue to build out those lines and fight electrification,” Kasper said.
But WEC also made clear in its environmental goals report that it sees natural gas as a bridge fuel, detailing plans in its environment goals report to “build 100 MW of natural gas-fueled, reciprocating internal combustion engine peaking plants.”
“Utilities across the country are leading the way in reducing emissions,” said Brendan Conway, a spokesperson for WEC Energy Group, in an email. “We are proud that the goals we announced this week are among the most ambitious environmental efforts in the industry.