In solar transition, WEC Energy Group sees long-term savings, advocates see short-term costs

BY ARTHUR THOMAS, staff writer

LESS THAN TWO decades ago, nearly three-quarters of the electricity delivered by WEC Energy Group came from coal. Now, only around a third of its power comes from coal, and the Milwaukee-based parent company of We Energies plans to eliminate coal as a power source by 2035.

In its place will be a host of renewable energy sources including solar, wind and battery storage. WEC Energy Group plans to spend $5.4 billion on renewables through 2027. The company’s plans call for 3,300 megawatts of renewable power, up from 40% from a year ago. Natural gas, nuclear and potentially hydrogen also play a big part in the company’s plans.

There are lots of reasons We Energies and other utilities around the country are transitioning from coal to solar, wind and battery storage. Many have emission reduction goals to hit, consumers increasingly want green energy sources, and there’s potential for savings for the utilities as well. Free fuel from the sun or wind is better than paying for coal, and solar panels cost less to operate and maintain.

But making the transition is less than straightforward. While WEC Energy Group has two solar farms in service, other projects have been delayed by supply chain issues, which, along with rising labor costs, added $100 million to two projects. Other projects are still seeking regulatory approval, and the vast majority of the plan is yet to be submitted to the state Public Service Commission.

The timing of battery storage components for the projects, a key part of maintaining reliability while using solar, is yet to be determined.

“You think about the batteries, a lot of batteries are being used for the vehicle industry,” said Scott Lauber, chief executive officer of WEC Energy Group.

To help address some of the issues with batteries, WEC is piloting an organic flow battery from German firm CMBlu at its Valley Power Plant in Milwaukee in the fourth quarter. The battery is made from abundant, recyclable materials and has up to double the discharge time of a lithium-ion battery.

Even just getting solar panels to the projects has been complicated as the U.S. Department of Commerce seeks to curtail efforts by Chinese firms to circumvent anti-dumping regulations. In some cases, the company’s panels are in a warehouse in Chicago waiting for proper documentation.

The challenges in completing solar and battery projects led WEC and Alliant Energy this past year to delay planned retirements of coal plants in Oak Creek, Portage and Sheboygan by a year to 18 months.

The ongoing shift in WEC Energy Group’s electricity generation is contributing – at least in the short run – to higher costs for customers. The com- pany’s Wisconsin utilities completed their first rate case amidst the shift in December, resulting in a $283.5 million, or 9.11% increase in Wisconsin Electric’s rates. The state Public Service Commission did reduce profits for the utilities, setting the authorized return on equity at 9.8%, down from 10%.

“We’re seeing a lot of cost pressures,” said Tom Content, executive director of the Citizens Utility Board of Wisconsin. “The clean energy transition, one of the things is the solar plans, you save money over time, but you have to pay for them right away.”

CUB is an advocate for residential utility customers and small businesses. The typical residential customer electric bill went up $154, or almost 11.5% for this year. Content said his focus has been on addressing controllable costs.

“To make it really cost effective, we've got to be able to refinance and eliminate profits from coal plants that aren't running,” he said.

Polling may suggest people are supportive of a transition to clean energy, but there is also a heightened level of attention on costs given the level of inflation in the past year, Content said.

“We’re kind of in this challenging moment of trying to make the transition happen in the most cost-effective way possible,” he said.

Todd Stuart, who represents large industrial companies as executive director of the Wisconsin Industrial Energy Group, shared a similar sentiment.

“Everybody has sustainability goals these days,” he said. “We want to do this in the most cost-effective manner, and we all need competitive rates.”

For WIEG members, energy costs are often among the top three expenses and some businesses spend more than $1 million per month on power, Stuart said.

WEC Energy Group’s analysis suggests its plans will save customers $2 billion over 20 years, Lauber said.

In his view, supply chains are likely the biggest risk for WEC’s plans to shift toward renewable energy.

While increased demand for solar panels would seem to drive prices up – threatening the potential cost savings – Lauber pointed to improved performance with so much interest in the technology.

“If we would have had this discussion 10 years ago, we wouldn’t have been talking about solar being economical,” he said.

In the short run, however, the WEC utilities will return to the Public Service Commission for a limited reopening of the rate case focused on costs related to projects going into service this year and in 2024.

“There’s a lot of capital going into service right now, and so there’s concern about the rate impact,” Stuart said. n