Xcel Energy's massive Sherco Solar project slated for Becker, Minn., would reap big climate change benefits, but it would be pricey.
Both the Minnesota Department of Commerce and the state Attorney General's Office opposed the project earlier this year when it was priced at about $575 million. They concluded that Xcel's bidding process had left ratepayers exposed to unduly high costs.
The Commerce Department and Xcel have since come to an agreement on a "price cap" for the solar plant, which the AG's Office also has approved.
"The cap is aimed at making sure consumers won't pay any more than the market would bear," said Kevin Lee, the Commerce Department's deputy commissioner for energy.
However, the project's current price — which tops the original $575 million estimate — is not being disclosed because Minneapolis-based Xcel considers it a "trade secret."
The Public Utilities Commission (PUC) Thursday is slated to vote on the solar farm, which would help replace electricity lost when Xcel closes its three big Sherco coal plants in Becker between the end of 2023 and 2030.
If approved by the PUC Thursday, Xcel says it expects the Sherco Solar plant to begin coming online in late 2024. The project is roundly supported by clean energy groups, local governments and labor unions.
The PUC's staff recently recommended that commissioners approve the plant, mostly for "socioeconomic and environmental benefits."
Still, PUC staff noted uncertainties about the project's ultimate price and concerns about the "cumulative impact on ratepayers" of the solar farm combined with other big-ticket items on Xcel's agenda.
The company has proposed a $500 million power line running from Becker to southern Minnesota, as well as several other solar projects that could cost hundreds of millions of dollars.
Xcel also is in the midst of a rate case before the PUC; it is asking for a 21% increase over three years.
Xcel plans to build a solar farm on 3,497 acres in the Becker area, which would produce 460 megawatts of electricity when the sun is shining. Currently, the largest solar farm in Minnesota is Xcel's 100-megawatt facility in Chisago County.
Sherco Solar would be the largest solar plant in the Upper Midwest, and one of the largest in the country, Xcel says.
"Sherco Solar is potentially the most important renewable energy development in Minnesota's history," the company said in a PUC filing.
The Xcel-owned solar plant would effectively remove up to 300,000 tons of carbon emissions annually. It would help economically boost Becker and Sherburne County, both which will lose significant tax revenue when Xcel's coal plants close.
Sherco Solar will also be a major construction project, creating about 900 union jobs, Xcel says. Its permanent workforce is expected to be 14. (The Sherco coal plants employ 230, down from 311 when Xcel began outlining its closure plans in 2015.)
"We think [Sherco Solar] is a great value for our customers," said Christopher Clark, Xcel's president for Minnesota. "We think this project fits in as a very low cost project."
The company recently estimated that the project's costs could be cut by at least 20% due to new renewable energy tax credits included in landmark federal energy legislation passed in August.
Before the law was passed, Xcel estimated ratepayers would pay for Sherco Solar over at least 15 years with the highest costs coming between 2026 to 2031 — roughly $5.60 to $7.90 a year for the average residential customer.
Supply-chain shortages and inflation have dogged the solar sector — like many other industries — over the last year.
In April, Xcel put Sherco Solar on "pause." Since April 2021, solar project prices had risen 25%, including 8% in 2022's second quarter alone, the company said in a July PUC filing. Xcel's Sherco costs had increased, too.
In that same filing, Xcel ended Sherco's "pause" status and asked the PUC to vote on the project as soon as it could — saying it had agreed with the Commerce Department on a price cap.
The complicated price cap would be linked to the price of bids Xcel is currently receiving for several other solar farms, totaling nearly 900 megawatts, in addition to Sherco Solar.
Still, the projected price of Sherco Solar is not public. Xcel has deemed it a trade secret, saying that if it was public, it could undermine the bidding process for its additional solar projects.
Bidders could see the Sherco Solar price as a floor — "and we wouldn't get the lowest bids," Clark said.
The Star Tribune formally challenged the PUC to make the updated project costs public. The PUC responded Tuesday that Xcel's confidentiality is warranted, noting Xcel's concerns that its current solar bidding process could be undermined.
