Minnesota’s utility regulators on Thursday approved Xcel Energy’s plans for a mammoth solar power plant in Becker, a project that will cost at least $575 million and eclipse the state’s current largest solar farm.
Utility regulators praised the new solar farm for its environmental benefits and economic impact. The Minnesota Public Utilities Commission (PUC) voted unanimously to allow Minneapolis-based Xcel to recover the cost of the project from its taxpayers.
“I think this is a tremendously important day for Minnesota,” PUC chair Katie Sieben said at the panel’s Thursday meeting.
The project has broad support from clean energy groups, local government and trade unions. It will help replace electricity — and property taxes — that will be lost when Xcel begins closing its three large Sherco coal plants in Becker between late 2023 and 2030.
Xcel estimates the project will create 900 union jobs in the construction sector.
“We are ready to begin work on the project,” Xcel’s Lead Assistant Counsel Matt Harris told the PUC. “We will start ordering 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 generate 460 megawatts of electricity when the sun shines, Xcel said. Currently, the largest single solar farm in Minnesota is Xcel’s 100-megawatt facility in Chisago County.
According to Xcel, Sherco Solar will be the largest solar power plant in the upper Midwest and one of the largest in the country, significantly increasing 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 the release of up to 300,000 tons of CO2 emissions per year. The project was designed to have minimal impact on prime farmland – a problem with solar projects.
However, the cost of the project has been controversial, with both the Minnesota Department of Commerce and the Attorney General’s office opposed earlier this year. Both concluded that Xcel’s bidding process exposed tariff payers to excessive costs.
That summer, the Department of Commerce and Xcel agreed on a “cap price” for the solar system, which the AG office also agreed to.
The complicated price cap is related to the cost of bids Xcel is currently receiving for several other solar farms alongside Sherco Solar.
Xcel hasn’t released current estimates for the cost, but said it will be more than the original estimate of $575 million.
Inflation and supply chain constraints have squeezed the solar energy business — like so many other industries — over the past year. Since April 2021, solar project prices are up 25%, including 8% in the second quarter of 2022 alone, Xcel said in a July PUC filing.
However, Xcel reiterated on Thursday that passing a landmark federal law in August — which includes increased tax subsidies for renewable energy — could cut the project’s ultimate cost to taxpayers by 20% to 30%.
“The passage of the Anti-Inflation Act took some of the pressure off,” said Allen Gleckner, senior director of clean power at Fresh Energy, a St. Paul-based renewable energy advocacy group.
Before the law passed, Xcel estimated that ratepayers would pay for Sherco’s solar array over a number of years, with peak costs occurring between 2026 and 2031 — about $5.60 to $7.90 per year for the average residential customer.
Xcel has treated the project’s revised costs as a “trade secret,” successfully arguing that disclosure would result in higher costs for solar projects currently being tendered. The Star Tribune this week formally challenged Xcel’s trade secret classification of costs; The PUC refused the challenge.
The PUC told Xcel on Thursday that it had to disclose the total cost of the project by mid-October.