Xcel doubles down on plan to swap coal for clean power in Minnesota

Xcel says it expects to break ground on the Sherco and Blue Lake battery installations next year and power them up in 2027. It aims to commission the Sherco solar project by 2029.

Rather than contract with independent solar and battery installations in its territory, Xcel wants to build and own all three projects itself. In the filing, it said rules set by Minnesota’s grid operator require company ownership of new energy facilities reusing interconnection rights at retiring power plants. The same filing asks the commission to approve agreements to purchase power from several third-party solar and battery projects that will connect to the grid elsewhere.

John Farrell, the Minneapolis-based codirector of the Institute for Local Self-Reliance and a frequent critic of the monopoly-utility model, said the looming tax-credit cliff creates an unusual circumstance where the need to quickly develop more clean energy cuts against his preference for an open and competitive bidding process that could result in a better deal for electricity customers.

“I am more sympathetic than I would be normally because we are stuck in the regime we’ve got and there’s a lot of money on the table,” he said, referring to the tax credits whose rollback is expected to raise Minnesotans’ electricity bills in the coming years.

To incentivize faster clean-energy deployment ahead of the cliff created by Trump’s megalaw, the Minnesota Public Utilities Commission in August said it would allow projects that meet the deadline for federal tax incentives to also access extended eligibility for state renewable energy credits.

Xcel spokesperson Theo Keith said the utility has ​“already taken steps to ensure this portfolio of projects will qualify for federal tax credits before they expire.”

But with the North American Electric Reliability Corp. forecasting a ​“high risk” of capacity shortfalls on the Upper Midwest grid by 2028, there’s a chance that the U.S. Department of Energy issues an emergency order requiring one of the Sherco plant’s two remaining coal units to run past its planned retirement next year, said Allen Gleckner, chief policy officer for Minnesota-based Fresh Energy.

The DOE has already done so for one retiring coal station in the Midwest, Michigan’s 1,420-MW J.H. Campbell plant. Its operator, Consumers Energy, says that order, which runs at least through Nov. 19 and which the DOE says it could extend for much longer, has already cost consumers at least $80 million. It’s unclear whether a similar order at Sherco would affect Xcel’s battery plans, but it would be disruptive to the utility either way, Gleckner said.

“The uncertainty that scenario contemplates is another reason why it would be a terrible idea,” Gleckner said.

Asked if Xcel had reason to expect a DOE emergency order at Sherco and whether that could interfere with its proposed clean-energy deployments there, Keith said only that Xcel is moving ahead with its plans to retire the coal units by 2030.

“We are in regular conversations about Minnesota’s energy future with various stakeholders, including federal, state, and local elected officials,” he said.