- Xcel Energy plans to have carbon-free gas utility operations by 2050, making the utility company the first to have a net-zero target across its electric and natural gas operations, according to the Bob Frenzel, Xcel president and CEO.
- In a first step, Xcel intends to cut carbon emissions from its gas utilities by 25% from 2020 levels by the end of this decade, partly by buying natural gas only from suppliers with "certified" low emissions, the Minneapolis-based company said Monday.
- Xcel, which has 2.1 million natural gas customers, expects to begin replacing natural gas with "green" hydrogen and renewable natural gas this decade, Frenzel said in an interview.
Xcel, with utilities in eight Midwest and Western states, is the first utility company to adopt a net-zero goal across both electric and natural gas operations, according to Frenzel.
"We're really the only company in the United States providing a comprehensive energy solution across the major emission profiles in the sector, the transportation sector, which is the largest emissions profile in our country, followed by electricity and, now, natural gas," Frenzel said.
Xcel, in late 2018, pledged to have carbon-free electricity by the middle of the century, with an 80% reduction goal for 2030. The company, in August 2020, unveiled a plan to help bring 1.5 million electric vehicles onto the roads by the end of this decade.
Initially, Xcel intends to take a three-pronged approach to cutting carbon emissions from its natural gas operations, Frenzel said.
First, the company plans to continue programs aimed at cutting leaks from its gas distribution systems, he said.
Second, Xcel will only buy certified "low methane" natural gas from suppliers, a move that will support upstream emissions reductions, Frenzel said. Earlier this year, Xcel started buying certified low-methane gas under a pilot program in Colorado.
Third, Xcel will help its customers use less natural gas through efficiency programs, "clean fuel" options and by supporting the switch to electric appliances and heating, according to Frenzel.
Xcel earned about $1.6 billion in revenue last year selling 444.3 million MMBtu of natural gas, according to the company's most recent annual report at the Securities and Exchange Commission.
With a service territory that includes parts of Colorado, Minnesota and Wisconsin, Frenzel doubts electric heat pumps will be able to fully replace natural gas as a heating fuel.
Xcel would have to increase its generating capacity by up to five times if its customer base were to fully electrify their homes and businesses, according to Frenzel.
"We think that the lowest cost path towards this emissions goal for our customers is to use the existing infrastructure of the gas business … and use it with a cleaner fuel alternative," Frenzel said.
Xcel will likely begin replacing natural gas with gas made from renewable sources and, ultimately green hydrogen, according to Frenzel.
With extensive research and development underway, Frenzel expects the cost of renewable natural gas and green hydrogen, which is made using renewable energy, to fall like it did for wind and solar.
There is likely a limit to how much renewable gas can be made, but hydrogen could scale "dramatically," Frenzel said, adding that hydrogen capabilities could come onto Xcel's system, and elsewhere, by the end of the decade.
"Incentives and regulation and legislation will help on the policy side as we make this transition," Frenzel said.
Meanwhile, on the regulatory front, the head of the Federal Energy Regulatory Commission outlined his views on the agency's authority to regulate interstate hydrogen transportation and storage in a letter to Sen. Martin Heinrich, D-N.M., last week.
"Some aspects of the commission's natural gas jurisdictional authority will likely be affected by industry developments that drive increased demand for hydrogen transportation by natural gas pipelines," FERC Chairman Richard Glick said in the Oct. 26 letter.
FERC has authority under the Natural Gas Act over hydrogen blending with natural gas on interstate pipelines, Glick said, noting that so far there has only been limited testing of blending.