Energy production shifting from coal to natural gas and renewables

Dan Krueger, senior vice president for WEC Energy Group, says “it doesn’t make sense” to keep running some coal plants as energy production shifts over to natural gas and renewables like wind and solar.

He spoke yesterday on an energy industry panel at the Wisconsin Manufacturers and Commerce Policy Day 2018.

WEC Energy Group is a utility holding company that runs WPS and WE Energies in Wisconsin, and has 60 percent ownership in American Transmission Company. In its Midwest service area, the company has 1.6 million electric customers and 2.9 million natural gas customers, with nearly 70,00 miles of electric distribution and 48,000 miles of gas distribution.

Energy production from coal is steadily transitioning to natural gas in Wisconsin, according to Dean Foreman, chief economist for the American Petroleum Institute.

This process has been taking place since 2005, he said, as both natural gas and renewable energy sources become more economically viable. Lucas Vebber, general counsel and director of energy and environmental policy for WMC, says the same thing has been happening throughout the country.

This trend is highlighted by the example of WEC Energy Group, which is going through a “profound shift” in its energy mix, according to Krueger. He says the company is shutting down four of its coal-fired power plants, and replacing them with “cleaner, newer generating assets that actually reduce customers costs.”

“It’s fairly expensive to operate these plants, and with the reduction in natural gas prices, that’s what sets the market in generation, is the cheapest marginal plant,” he said. “The cheapest marginal plant is usually a gas plant, so it doesn’t make sense to run these [coal] plants anymore.”

Although Wisconsin has no natural gas or oil production of its own, the state’s infrastructure is playing a key role in transporting these resources to the rest of the country.

“This is a major infrastructure state,” Foreman said. He pointed out that pipelines for natural gas, crude oil and refined products cross through Wisconsin, connecting through Minnesota and down from Canada, moving down through Illinois.

“More than 20 percent of all crude oil that’s imported is moving through these pipelines, so it’s crucial from a market connectivity standpoint that this continue to be fluid, and that it can grow,” Foreman said.

This shift from coal to natural gas has been bringing down emissions for the state, which are now 10 percent lower than they were in 2007, Foreman added.

“As good as Wisconsin’s economic growth has been, it could have been even better if we had lower electricity prices, and if we continue to foster the infrastructure that’s so important to American consumers,” he said.

Krueger says reliability in the state’s energy transportation infrastructure is “extremely important” for incoming companies like Foxconn, Amazon and Haribo.

“We have extremely high power quality here due to our infrastructure we’ve built along with American Transmission Company,” he said.

WEC is planning to build some natural gas fuel generation capacity in the Upper Peninsula of Michigan, Krueger said, while also adding “quite a bit of zero carbon generation.”

He notes that solar prices have gone down by as much as 80 percent for entities that can buy millions of panels at a time.

“We are deploying these massive solar fields if the (Wisconsin Public Utility) commission gives us approval,” he said. “We will continue to do more of that, and we expect customer rates to decline.”

Krueger says the natural gas pipeline into Wisconsin is currently full, meaning “our ability to import significant amounts of new natural gas to serve industrial customers has reached its limit.”

He adds: “We will be looking to expand the interstate gas pipeline network to serve these customers.”

–By Alex Moe