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Energy and climate division considers a new District Energy-Xcel agreement

When emerald ash borers were found in St. Paul in 2009, experts warned an infestation could be afoot, and it would best be contained by the swift removal of infected trees. As the infestation accelerated, trees started coming down and the process continues 11 years later.

So what happens to all that wood? Well, a lot of it is used to keep downtown St. Paul buildings (including the State Capitol complex) cool in the summer and warm in winter.

The St. Paul District Energy plant burns urban tree waste and uses it to heat and cool 80% of the buildings in downtown St. Paul. In addition to the 65 megawatts of thermal energy the plant produces for downtown St. Paul, it also creates 25 megawatts of electricity for Xcel Energy. Those 25 megawatts are part of a biomass mandate from the state. And that’s where the Legislature comes in.

On Tuesday, the House Energy and Climate Finance and Policy Division had an informational hearing about an as-yet-unintroduced bill sponsored by Rep. Jean Wagenius (DFL-Mpls). It would lay out parameters for a new power purchase agreement between District Energy and Xcel Energy.

Under the agreement, waste wood would continue to be the primary fuel source for the electricity, and any wood that’s been quarantined by the Department of Agriculture to stop the spread of emerald ash borer infestation must pass department inspection before being called into energy-producing duty.

The bill would also require the cost of that electricity be comparable to what Xcel pays for refuse-derived fuel. And that a new agreement cannot be approved by the Public Utilities Commission unless it has also approved a proposal for electrification of the District Energy heating and cooling system from renewable energy sources, a project that must be completed by the end of 2027.

While no action was taken, Wagenius said there was an agreement from both party caucuses in the House and Senate on its language during the regular session.

Ken Smith, chief executive officer of District Energy, explained that an earlier infestation inspired the idea of the plant being powered by wood waste. In the 1970s and ‘80s, Dutch elm disease wiped out most of the verdant canopy that enshrouded the streets of St. Paul and Minneapolis in shadow during the summer months. Many of the felled trees were taken to an area near Pig’s Eye Lake in the southeast corner of St. Paul and burned.

“The fires burned for months,” Smith said.

Converting wood waste to energy production became a project, and the District Energy plant that had been built in 1979 into a Mississippi River bluff in downtown St. Paul was transformed for the purpose.

So how much wood are we talking? Smith said the waste from the emerald ash borer brought to the District Energy plant last year came to 260,000 tons and, if converted to wood chips, could fill as many semi-trailer trucks as could stretch from St. Paul to New Orleans. Smith added the plant has received as much ash tree waste in the first half of this year as it did all of last year.

Rick Evans, director of regional government affairs for Xcel Energy, said the new agreement — which would take effect at the beginning of 2023 — would reduce Xcel costs by about 50%, “which we would pass on to our customers. … It also sets up a path for the eventual electrification of the system so that the Capitol and St. Paul businesses could receive up to 100% carbon-free energy.”

Rep. Dave Baker (R-Willmar) asked about the expected lifespan of the current plant.

“It has a 20-year agreement,” Smith said. “But there’s no reason that it can’t last 30-35 years. It’s more about economics and the current situation in the electricity world. It’s more expensive than wind and solar, but we have a waste stream that needs to be managed. Until there’s a different system to work with that, there needs to be a glide path to the next thing.”

As for solar, District Energy claims one of the country’s largest hot water solar projects, fueled by an array atop the neighboring RiverCentre complex.


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