PUC approves Xcel plan to replace retiring Minnesota coal plant with mega solar farm

Xcel Energy’s ambitious plan to help replace a massive retiring coal plant with one of America’s largest solar farms is almost a reality.

The Minnesota Public Utilities Commission (PUC) voted unanimously Thursday to approve a site permit in Sherburne County for a 250-megawatt solar facility, the last of three large solar projects imperative to the company’s climate goals and its push to meet a state requirement for a 100% carbon-free grid by 2040.

The site permit was the last major hurdle for the electric utility, though Xcel needs to still make several compliance filings with the state before starting construction.

“It really positions the entire Sherco solar project to be the largest in the Upper Midwest and one of the few largest in the United States,” said Ryan Long, Xcel’s president in Minnesota.

Sherco 3 will cost roughly $434 million to build and cover about 1,780 acres. Together, the three large Sherco solar projects will cost more than $1.1 billion and will be able to generate up to 710 megawatts (MWs) of electricity. That’s enough power for roughly 150,000 homes.

That new power is crucial for Xcel as it loses traditional fossil fuel sources and transitions to a carbon-free future. On Dec. 31, Xcel closed the first of three coal-fired generators at its Sherburne County Generating Station in Becker. The other two units at the Sherco coal plant are scheduled to retire in 2026 and 2030. All three together could generate up to 2,220 MWs of electricity.

The Sherco solar project near the coal plant will only make up a portion of that energy and will rely on sunny days to produce electricity. But Xcel said the solar farms will reduce carbon emissions by the equivalent of taking more than 92,000 gas cars off the road per year. Plus, they won’t come with the cost of buying fuel.

Long said Xcel has enough other power sources — including two large nuclear plants and a fleet of natural gas plants — to ensure the company has around-the-clock energy for customers after coal.

Xcel proposed the Sherco solar projects during the COVID-19 pandemic after PUC officials asked utilities in the state for ways to boost Minnesota’s hurting economy. But Long said there are many benefits to building huge solar facilities at the Sherco site.

One such benefit is that Xcel can use existing transmission rights from the coal plant to hook up solar to the larger grid faster and easier.

Sherco 3 will create about 400 union construction jobs. And Xcel said the three solar projects will help the local tax base amid the coal exit. The company expects to dole out more than $350 million in taxes and payments to local landowners and governments through the 35-year life of the solar projects, said Bria Shea, regional vice president of regulatory policy for Xcel.

“It’s certainly a very important project for Minnesota and the Upper Midwest, and I’m excited to continue to see it progress,” said Katie Sieben, a DFLer who chairs the PUC.

Some public comments on Sherco 3 were supportive of the project. But some critics are unhappy with how close the project is to a church cemetery while others expressed concerns about the temporary loss of agricultural land and Xcel’s decision to close its coal plant.

“What of cloudy days, snowy days, dark winter days?” wrote the Rev. Joseph Backowski, a parochial administrator at St. Marcus Catholic Church in Clear Lake.

On Thursday, the PUC added conditions to the Xcel permit to help block the view of the solar farm from nearby homes and the cemetery, including by planting trees and shrubs.

In addition to the solar, Xcel plans to build a novel, long-lasting battery system near the coal facility to store variable renewable power.

Xcel’s Upper Midwest energy mix was 64% carbon free in 2023, mostly because of wind and nuclear. Solar made up only 4% of electricity provided to customers. Long said the company is ramping up solar in part because it’s cheaper to build than it once was. Tax credits Congress and President Joe Biden passed in the 2021 Inflation Reduction Act help.

Xcel also said it can’t rely too much on one type of renewable power.

“I don’t want to run a system that is all wind or that is all solar,” Long said. “Having those diverse resources on the system is really important from an overall reliability perspective.”

Minnesota utilities are leaning more heavily on wind than solar in a region with excellent wind resources, said Beth Soholt, executive director of Clean Grid Alliance, a trade group for wind, solar and battery storage developers.

“Wind continues to be so economical; that’s what utilities in Minnesota are looking for,” she said, adding there’s still a “synergy in pairing wind and solar,” and utilities want that diversity.

Xcel has said it could be up to 88% carbon free in the Upper Midwest by 2030.

Right now, Minnesota’s largest solar array is a 100-MW Xcel facility in Chisago County. Most of the company’s solar energy comes from about 175 MWs of little rooftop arrays and close to 900 MWs of small-scale community solar gardens; Xcel customers subscribe to the gardens through third-party operators.

Xcel predicted in PUC filings Sherco 3 would decrease customer bills through the first 10 years of operations thanks to production tax credits, though those credits expire after that decade. Long said the Sherco projects will be the lowest-cost solar on Xcel’s system once it’s operating.

The company is already building its first two Sherco solar plants and expects one to begin operating by the end of this year and the other in 2025. Xcel hopes Sherco 3 will be up in 2026.

Three Minnesota trade unions — the International Union of Operating Engineers Local 49, the North Central States Regional Council of Carpenters and the Laborers’ International Union of North America (LIUNA) — supported the solar projects.

“Our members worry about losing work in coal-fired power facilities and about the quality of jobs on new renewable energy projects,” wrote Kevin Pranis, LIUNA’s marketing manager in Minnesota, in a letter to the PUC. “The Sherco Solar project has provided an opportunity for some of these members to direct their careers toward renewable energy work.”

Long said there will be only 18 long-term jobs at the Sherco solar sites, far fewer than at the coal plant. But the company has promised displaced coal workers a job elsewhere at Xcel.

As part of a long-range plan for its electric system the PUC is considering, Xcel plans to extend the life of its two large nuclear plants while building 3,600 MWs of large-scale wind and solar by 2030, significant new battery storage and 1,000 MWs of small-scale solar. The company also has proposed two new natural gas plants that would begin operating in 2027 and 2028 as part of an enormous infrastructure agenda.