PUC votes on Xcel’s plan to replace retiring Minnesota coal-fired power plant with mega solar farm

Xcel Energy’s ambitious plan to replace a massive, shuttered coal-fired power plant with one of the largest solar farms in America is almost becoming a reality.

The Minnesota Public Utilities Commission (PUC) is poised to approve a permit for a 250-megawatt solar farm in Sherburne County on Thursday, the last of three major solar projects needed to meet the company’s climate goals and the state’s requirement for a 100% carbon-free grid by 2040.

Obtaining a building permit is the final, key hurdle for the utility, though Xcel must file several state-required documents before construction can begin.

“This is an exciting part of our energy transformation,” said Beth Soholt, executive director of the Clean Grid Alliance, an industry organization for wind, solar and battery storage developers.

Sherco 3, which the PUC will vote on Thursday morning, will cost about $434 million and cover about 1,780 acres. Together, the three large Sherco solar projects will cost more than $1.1 billion and could generate up to 710 megawatts (MW) of electricity. That’s enough power for about 150,000 homes.

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

The Sherco solar project near the coal-fired plant will only cover a portion of that electricity and will rely on sunny days to produce it. But Xcel said the solar farms will reduce carbon dioxide emissions by the equivalent of taking more than 92,000 gas-powered cars off the road each year. And they won’t incur fuel costs.

Xcel says it has enough other energy sources — including two large nuclear plants and a fleet of gas-fired power plants — that the company can provide customers with around-the-clock power after burning coal.

Xcel proposed the solar projects to Sherco during the COVID-19 pandemic after PUC officials asked utilities in the state to find ways to boost Minnesota’s struggling economy. But the company argued that building massive solar facilities at Sherco has multiple benefits.

First, Xcel can use existing transmission rights from the coal-fired power plant to connect solar power to the larger grid more quickly and easily.

Sherco 3 will create about 400 union construction jobs. And Xcel said the three solar projects will help the local tax base as it transitions away from coal.

In addition to solar power, Xcel plans to build an innovative, long-life battery system near a coal-fired power plant that will store variable renewable energy.

In 2023, Xcel’s Upper Midwest energy mix was 64% carbon-free, mostly from wind and nuclear. Solar accounted for just 4% of electricity delivered to customers.

Minnesota utilities rely more on wind power than solar power, Soholt said, because the region has excellent wind resources.

“Wind power is still so economical that that’s what utilities in Minnesota are looking for,” she said, adding that there is still “synergy in combining wind and solar” and utilities want that diversity.

The company says it could achieve an 88% reduction in carbon dioxide emissions in the Upper Midwest region by 2030.

Currently, the largest solar installation in Minnesota is Xcel’s 100-MW installation in Chisago County. The majority of the company’s solar power comes from about 175 MW of small rooftop installations and nearly 900 MW of small community solar gardens, which are run by third-party operators and Xcel customers subscribe to have them turned on.

Xcel predicted in PUC documents that the Sherco 3 would lower customers’ bills over the first 10 years of operation thanks to production-linked tax credits, though those credits expire after a decade.

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

Three Minnesota labor 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 — have supported the solar energy projects.

“Our members are concerned about job losses at coal-fired power plants and the quality of jobs in new renewable energy projects,” Kevin Pranis, LIUNA’s marketing manager in Minnesota, wrote in a letter to the PUC. “The Sherco Solar project has provided some of these members with the opportunity to pursue careers in renewable energy.”

The company promised unemployed miners jobs elsewhere in Xcel.

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

Public comment on Sherco 3 has been mixed, with some critics unhappy with how close the project is to a church cemetery, others with the temporary loss of farmland or Xcel’s decision to close a coal-fired power plant.

“What about cloudy days, snowy days, dark winter days?” wrote Father Joseph Backowski, parish administrator at St. Mark Catholic Church in Clear Lake.

Erin Geiger of Lakeville wrote that the Sherco 3 “provides needed and renewable energy to Minnesotans.”