Is Xcel Energy running out of coal for the winter?

Xcel Energy made headlines this week by announcing that they will be seeking to increase the cost of electricity by a massive 21.2 percent over the next three years, but the company may have an even bigger public relations nightmare on its hands if it runs out of coal before winter approaches.

Coal plants generally have about two months of coal on-site at all times, but from the looks of the coal pile at the Sherburne County (Sherco) plant, Xcel may not have as much coal on-site as it usually does for winter. The photos below show the coal pile in early June compared to a few weeks ago. The differences are stunning and worrisome, especially if we consider the blackouts that devastated Texas last February.

Unfortunately, Xcel may not be the only utility that is short on fuel. Estimates from S&P Global Platts show that pre-winter coal inventories in the United States are roughly 30 percent lower this season compared to last.

Coal plants around the Midwest have been running more often this year because high natural gas prices have made it more economical to burn coal than gas. According to Energy Information Administration data, coal use on the regional grid in August of 2021 was substantially higher than in August 2020.

While coal demand is rebounding, supplies are not. According to S&P Global, mining companies have not ramped up production to meet the new market conditions, even though coal prices are rising.

There are several reasons why coal suppliers have not increased production, including limited access to capital, uncertain demand outlook, labor shortages, and the time it takes to increase and transport new supplies.

The lack of capital for coal facilities is partly due to pressure campaigns from environmental groups to force investors to divest from fossil fuel assets as part of their Environmental, Social, Governance (ESG) investor guidelines. These are the guidelines former Xcel Energy CEO Ben Fowke cited as the company’s reason for pursuing investments in wind and solar generation that don’t show up when we need them most.

The graph below shows Xcel’s coal fleet generated more electricity, with an installed capacity of 2,749 MW, produced more electricity than all of the 22,040 MW wind on the regional grid combined during several hours of the polar vortex of 2021.

Now, winter is coming, and Xcel may not have enough coal to generate the electricity we rely upon when temperatures drop, and the wind often stops blowing. Xcel prioritized renewable investments to get a massive government-approved profit instead of reliability.

Instead of inventing new ways to raise the cost of energy for Minnesota families, Xcel should make sure they have enough fuel for the winter, so we don’t have rolling blackouts.