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Illinois

Coal Plant Communities Seek a Just Economic Transition

By Lilli Ambort - Institute for Local Self-Reliance, August 7, 2020

Xcel Energy’s announcement that the Sherburne County Generating Station (Sherco) in Becker, Minn. will close by 2030 did not come as a surprise, but for local residents, the uncertainty of the city’s economic future has become a pervasive issue. Sherco is one of the largest coal-powered generating stations in the state, with three boilers and a total capacity of 2,238 megawatts. The Sherco power plant provides 301 jobs and a huge portion of the small city’s tax base. Sherburne County Commissioner Tim Dolan remarks “At 77% [of the City’s tax base], it’s probably easier to point to stuff [Sherco] didn’t pay for. It’s a much shorter list.”

Xcel Energy plans to replace two of the coal boilers with a 786 megawatt gas plant that will provide roughly 30 permanent jobs. Environmentally, the closure of coal plants drastically reduces carbon emissions and air pollution (but the addition of a gas plant at Sherco is questionable). Economically, Becker and many cities like it are left scrambling, looking for alternative forms of employment and tax revenue.

As gas dethrones coal generation as the ruler of the U.S. power sector, the cost of running coal power plants becomes economically uncompetitive. Eventually, gas may be surpassed by renewable energy, with solar and wind expected to be the fastest growing source of electricity generation for the next two years. For communities that rely on coal plants for tax revenue and jobs, the early closure of these plants spells trouble even as it reduces pollution and saves electric customers money. The transition away from fossil fuels provides new economic opportunities, but the question becomes whether these clean energy opportunities can replace lost income and tax revenue from coal generation plants.

Despite the news about the Sherco plant, Becker city officials remain hopeful for new economic opportunities that may come from the plant closure. Becker has attracted the attention of Google, which is looking to build a $600 million data center next to Sherco, potentially generating 2,000 short-term construction jobs and 50 permanent jobs. The data center would be powered by two wind power projects. While the Google project is still up in the air, Northern Metal Recycling is already moving to build a metal recycling plant next to Sherco, with the potential to create about 150 jobs in Becker. The possibility of new jobs, new people, and new tax revenue excites residents, and for now, these new developments do not completely replace all the jobs and tax revenue lost from the closure of Sherco, but they provide some economic hope. Unfortunately, other communities across the U.S. have not been as lucky, left with little to no other options for economic revitalization after coal plant closures.

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