Xcel Energy was a coal-first power company. Now it's going carbon-free

The $30 billion Minneapolis-based utility has already shut down a quarter of its coal power plants. And it will soon pull the plug on another quarter.

Xcel Energy recently announced an ambitious plan to deliver zero-carbon electricity by 2050, making it the first large American power company to set that challenging goal.

"We are leading the industry," Xcel Energy CEO Ben Fowke told CNN Business. "It's a product of what our customers and regulators want."

The transformation of Xcel Energy underscores the rise of renewable energy, driven by a sharp decline in the cost of solar and wind and a desire among Americans for cleaner power.

"Technology has come so far. Wind is already beating fossil fuel alternatives -- even with low natural gas prices," Fowke said during an interview from the sidelines of the BloombergNEF Summit in New York.

Fowke estimated that Xcel's wind costs have plummeted by more than two-thirds over the past decade, while solar is down by about 80%.

Wind and solar costs have plunged so rapidly that 74% of the US coal fleet could be phased out for renewable energy -- and still save customers money, a report published this week by nonpartian think tank Energy Innovation found.

Xcel is retiring 23 coal-fired power plants

Xcel, which delivers power to 3.6 million customers in eight Western and Midwestern states, has already slashed its carbon emissions by 38% from 2005 levels. And it has pledged to get to 80% by 2030.

To do it, Xcel is rapidly expanding its vast renewable energy portfolio, which is expected to make up more than half its power by 2024. The company plans to build 12 new wind farms across seven states.

"We have some of the best wind resources in the entire country -- right in our backyard," Fowke said.

Xcel is rapidly moving away from coal, which supplied 46% of its power of 2013. The utility has been approved by local authorities to retire 23 coal units between 2005 and 2027 -- or about half its capacity.

'You're saving the whole world'

The shift by Xcel, and to a lesser extent by the industry at large, reflects growing concerns about climate change.

"You could kill everybody in the whole world someday if you're not careful," billionaire Michael Bloomberg said, referring to climate change broadly, at the BloombergNEF Summit in New York on Monday.

Bloomberg congratulated Xcel Energy, as well as French power company ENGIE, for leading the way in the transition to cleaner energy.

"You're saving the whole world," said Bloomberg.

The billionaire business leader announced a Decarbonization Tracker aimed at keeping power companies honest as they transition away from fossil fuels.

"When you talk to people that run big energy companies, they understand the world is changing. They are not these people who say it's a commie plot," Bloomberg said.

Americans want clean energy -- but not at any cost

But that doesn't mean that delivering zero-carbon electricity will be easy. Power executives stressed that customers want cleaner energy -- but not if that means their utility bills skyrocket.

"Cost is such an overwhelming importance to them that we have to be careful about 100% decarbonization," Ralph Izzo, CEO of PSEG, said at BloombergNEF.

There are also concerns about the variability of renewable energy, namely the fact that the sun doesn't always shine and the wind doesn't always blow.

Australia suffered blackouts in 2016 after wind generators there tripped off unexpectedly during a major storm, according to Audrey Zibelman, CEO of Australian Energy Market Operator.

"We learned a hard lesson in Australia," Zibelman said. "But it's a totally solvable issue."

Xcel Energy insists it's focused on affordability and reliability as it moves away from coal. That's why for now it will continue to rely on natural gas, a cleaner-burning fossil fuel.

"We're going to need natural gas to make that transition," Fowke said.

The Xcel Energy CEO also said that nuclear power plants will be essential if the United States wants to achieve sharp declines in emissions.

"The math is pretty tough if you lose nuclear," Fowke said.

Breakthrough technologies needed

The math might not add up even with nuclear.

"We do not have all of the technologies at our disposal right now to get to 100% reduction of carbon," said Lynn Good, CEO of Charlotte-based Duke Energy.

Xcel Energy acknowledges that the final stage of its journey to delivering carbon-free electricity will require technologies "not yet commercially available."

Fowke said those alternatives could include hydrogen, next-generation nuclear or geothermal technologies.

While most customers and officials have welcomed Xcel's pledge to go carbon free, Fowke said that some remain skeptical.

"Of course we get naysayers. There are people who think anything renewable is expensive and not worth doing," he said. "The facts are on our side."