Xcel Energy plans to build the Midwest's largest battery energy storage site at the Sherco Energy Hub in central Minnesota. The project is among a series of investments that will strengthen the region's energy security and expand the company's investment at Sherco and beyond.
"We're making a significant investment in battery storage because we see it as a critical part of Minnesota's energy future," said Bria Shea, president of Xcel Energy-Minnesota, North Dakota and South Dakota. "Batteries help us store energy when it's inexpensive to produce and dispatch it when needed, allowing us to continue delivering reliable electricity to customers while keeping bills low."
The proposal, filed with the Minnesota Public Utilities Commission on Friday, will:
- Double the amount of battery storage adjacent to the Sherco coal plant in Becker, which is scheduled to retire by the end of 2030. The Commission previously approved 300 megawatts of storage. The new proposal increases the capacity to 600 megawatts.
- Add 135.5 megawatts of battery storage at the company's Blue Lake facility in Shakopee.
- Expand the company's Sherco Solar facility with an additional 200-megawatt solar array in Clear Lake Township.
If approved, the company intends to start construction on the battery storage projects in 2026, with the batteries serving customers by late 2027. The projects will use lithium iron phosphate (LFP) battery cell technology, which has a strong track record for reliability and safety. LFP batteries discharge energy in four-hour increments and are quick to recharge, allowing for regular use.
The batteries will re-use existing grid connections, allowing Xcel Energy to store energy produced across its Upper Midwest system at its wind, solar, nuclear and natural gas facilities and release it during periods of high demand.
The Sherco battery projects will create more than 150 high-quality, union construction jobs and an estimated $200 million in local tax payments combined. The Blue Lake project will create an estimated 55 construction jobs and $60 million in local tax payments.
"For half a century, LIUNA members have kept the lights on in Minnesota by building and maintaining Sherco coal units. Today, we're proud to transform the plant into a clean energy hub pounding posts for solar panels, planting pollinator habitat, and constructing pads for battery storage," said Joel Smith, president and business manager, Laborers' International Union of North America Minnesota and North Dakota. "In our work with Xcel Energy, we're meeting Minnesota's climate goals while supporting local workers and communities."
Xcel Energy expects the projects will qualify for federal tax credits (offsetting 30% of the cost for the Blue Lake battery and 40% for the Sherco battery projects and Sherco Solar, which are in an energy community). The company passes these tax credits directly to customers in the form of lower bills.
Sherco Solar expansion
Xcel Energy's proposal to add a fourth phase to Sherco Solar would bring the facility's total generating capacity to 910 megawatts by 2029. The expansion will create an estimated 300 union construction jobs and $90 million in local economic benefits.
Sherco Solar is the Upper Midwest's largest solar generating facility. It has a strong record of delivering carbon-free electricity for customers since it went into service in 2024. The first two phases are already online, with a third phase under construction and scheduled to start producing electricity for customers in 2026.
The latest proposals are among a series of investments Xcel Energy is making in central Minnesota even as coal operations wind down. Learn more about Xcel Energy's work at the Sherco Energy Hub.
About Xcel Energy
Xcel Energy (NASDAQ: XEL) is a leading energy provider, dedicated to serving millions of customers with excellence. We make energy work better for customers, helping them thrive every day. That means always raising the bar delivering better service and providing more reliable, resilient and sustainable energy.
We are committed to leading the clean energy transition, meeting our customers' need for more, cleaner power, while keeping bills as low as possible. Because the people we serve depend on us to power their lives.
Headquartered in Minneapolis, we work every day to generate and distribute electricity and gas to customers across eight states: Minnesota, Colorado, Wisconsin, Michigan, North Dakota, South Dakota, New Mexico, and Texas. For more information, visit xcelenergy.com or follow us on X and Facebook.
