Biomass Feasibility Project Final Report - Xcel Energy

THE PROJECT: IDENTIFYING EFFECTIVE BIOMASS STRATEGIES
Project History
The history of Minnesota biopower development is succinctly summarized in Xcel Energy’s 2007
Renewable Development Fund Request for Proposals. The following is excerpted from this
document with minor modifications and some updates.
Xcel Energy operates the Prairie Island Nuclear Generating Plant at Red Wing,
Minnesota, which uses “dry casks” to store spent fuel from the plant. In 1994, the
Minnesota legislature enacted legislation that established a “renewable development
fund.” This legislation required Xcel Energy to transfer to a renewable development
account $500,000 annually for each dry cask containing spent fuel that is located at
Prairie Island after January 1, 1999.
In June 2003, the legislature passed new legislation that made changes to several
provisions of the original legislation establishing the RDF program. Among other things,
the new legislation increased the level of funding and distributions from the Fund.
Specifically, the legislation provides for Xcel Energy to transfer to the Fund $16,000,000
annually each year Prairie Island is in operation. From this amount, up to $6,000,000 must
be allocated to fund renewable energy production incentives for eligible wind and onfarm
biogas facilities. Such production incentive payments are administered by the
Minnesota Department of Commerce, which determines eligibility under Minnesota
Statutes 2001, §216C.41.
The initial RDF funding cycle began with the release of the first RFP in mid-2001, which
resulted in the selection of 19 projects receiving over $15.5 million in funding. These
projects included new energy production projects, as well as research and development
into solar, wind, hydro and biomass technologies. The second funding cycle resulted in
28 projects being selected with a total award amount of $26.5 million. Some of these
projects entered into power purchase agreements to sell energy and/or capacity to Xcel
Energy, while other projects consumed the electricity produced on-site. Descriptions of
projects selected through the second funding cycle can be found at
http://www.xcelenergy.com/rdf, click on “Renewable Development Fund” and “Project
Selections” for Cycle 1 and Cycle 2 along the left side of the screen.
The RDF Board is responsible for administrating the Fund, including implementing the
funding process, evaluating and selecting requests, and disbursing funds to successful
applicants. All decisions of the Board are made by consensus and the Board relies on
Xcel Energy RDF staff and technical consulting assistance as necessary to administrate
the program. At this time, the Board consists of two representatives from Xcel Energy,
Betsy Engelking and Brian Zelenak; two representatives from the environmental
community, William Grant and Jack Keers; a representative from the Prairie Island Indian
Community, Heather Westra; an Xcel Energy commercial ratepayer representative from
the Minnesota Chamber of Commerce, Mike Franklin; and an Xcel Energy residential
ratepayer representative from the Minnesota Department of Commerce, Assistant
Deputy Commissioner Mike Bull.
The overall purpose (mission) of the RDF is to increase the market penetration of
renewable energy resources at reasonable costs in the Xcel Energy service territory,
promote the start-up, expansion, and attraction of renewable energy projects and
companies in the Xcel Energy service territory and stimulate research and development
Page 2
Identifying Effective Biomass Strategies:
Quantifying Minnesota’s Resources and Evaluating Future Opportunities