Xcel gets OK to build Minnesota's largest solar plant in Becker

Minnesota utility regulators Thursday approved Xcel Energy's plans for a mammoth solar power plant in Becker, a project that will cost at least $575 million and dwarf the state's current largest solar farm.

Utility regulators lauded the new solar farm for its environmental benefits and its economic impact. The Minnesota Public Utilities Commission (PUC) voted unanimously to allow Minneapolis-based Xcel to recover costs for the project from its ratepayers.

"I think this is a hugely important day for Minnesota," Katie Sieben, the PUC's chairman, said at the panel's meeting on Thursday.

The project is roundly supported by clean energy groups, local governments and labor unions. It will help replace electricity — and property taxes — that will be lost when Xcel begins closing its three big Sherco coal-fired power plants in Becker between the end of 2023 and 2030.

Xcel estimates the project will create 900 union construction jobs.

"We are ready to begin work on the project," Matt Harris, Xcel's lead assistant counsel, told the PUC. "We will begin placing orders for the panels tomorrow."

Sherco Solar will come online in two phases, in late 2024 and late 2025, and will employ 14 people, the utility said.

Sherco Solar will cover 3,497 acres in the Becker area and churn out 460 megawatts of electricity when the sun is shining, Xcel said. Currently, the largest single solar farm in Minnesota is Xcel's 100-megawatt facility in Chisago County.

Xcel said Sherco Solar will be the largest solar plant in the Upper Midwest and one of the largest in the country, significantly boosting Minnesota's solar power capacity, which stood at 1,357 megawatts at the end of 2021. Solar currently provides about 3% of Minnesota's electricity.

Sherco Solar, Xcel said, will effectively avoid releasing up to 300,000 tons of carbon emissions annually. The project has been designed to have minimal impacts on prime farmland — a concern with solar projects.

But the project's cost has been controversial, with both the Minnesota Department of Commerce and the Attorney General's Office opposing it earlier this year. Both concluded Xcel's bidding process left ratepayers unduly exposed to high costs.

This summer, the Commerce Department and Xcel agreed on a "price cap" for the solar plant, which the AG's office also approved.

The complicated price cap is linked to the cost of bids Xcel is currently receiving for several other solar farms beyond Sherco Solar.

Xcel has not released current estimates for the cost but said it will be more than the original $575 million estimate.

Inflation and supply chain constraints squeezed the solar energy business — like so many other industries — during the past year. Since April 2021, solar project prices have climbed 25%, including 8% in 2022's second quarter alone, Xcel said in a July PUC filing.

However, Xcel on Thursday reiterated that the passage of landmark federal legislation in August — which includes beefed-up renewable energy tax subsidies — could end up reducing the project's ultimate cost to ratepayers by 20 to 30%.

"The passage of the Inflation Reduction Act has taken some of the pressure off," said Allen Gleckner, lead director for clean electricity at Fresh Energy, a St. Paul-based renewables advocacy group.

Before the law was passed, Xcel estimated ratepayers would pay for Sherco's solar over several years, with the highest cost coming between 2026 to 2031 — roughly $5.60 to $7.90 annually for the average residential customer.

Xcel has kept the project's revised cost a "trade secret," successfully making the case that revealing it would result in higher costs for solar projects currently out for bid. The Star Tribune this week formally challenged Xcel's designation of the cost as a trade secret; the PUC denied the challenge.

The PUC told Xcel on Thursday that it had to disclose the project's total cost by mid-October.