Xcel Energy has reached a settlement with clean energy nonprofits that further swings the utility’s integrated resource planning toward zero-carbon resources.
The utility and Clean Grid Alliance, Fresh Energy and Minnesota Center for Environmental Advocacy announced a settlement agreement in early October that will nudge Xcel Energy’s Upper Midwest Energy Plan to zero carbon emissions sooner. Other parties to the settlement include the Minnesota Department of Commerce, labor unions and generation developers.
The agreement affects both Xcel’s integrated resource plan (24-67) and its Firm Dispatchable Resource Acquisition (23-212) dockets before the Minnesota Public Utilities Commission. Now Xcel’s Firm Dispatchable Resource Acquisition is open not just to gas, but also to renewables and storage. Xcel also has pledged to better use existing gas plants to avoid the need for multiple gas peaking plants in its IRP.
In the firm dispatchable docket, Xcel has agreed to build more than 300 MW of new storage across two standalone projects, as well as an additional 230 MW in the form of a wind-and-storage hybrid project and a 170-MW solar-and-storage project. Xcel also will extend two power purchase agreements with existing gas plants and build just one 374-MW peaker gas plant in Lyon County that also will be hydrogen-capable. The settlement negates the need for a second natural gas plant Xcel had proposed for Fargo, N.D.
In addition to the resource acquisition docket, the settlement dictates even more wind, solar and storage through 2030 via the IRP, including: 600 MW of standalone storage; 400 MW of new solar connecting to the grid at the A.S. King plant site in Oak Park Heights, Minn.; and 3.2 GW of wind additions, most of which will use the Minnesota Energy Connection transmission line.
Xcel also agreed to plan for longer lifespans of its nuclear plants. It will use a 2050 retirement date for the Monticello Nuclear Generating Plant and 2053 and 2054, respectively, for Prairie Island Generating Plant Units 1 and 2.
An earlier version of Xcel’s IRP assumed a little more than 2.2 GW of new gas peaker capacity by 2030, spread across six or more new plants. The settlement terminates all but the Lyon County plans. Xcel also agreed to explore thermal battery options with Rondo Energy and file a pilot proposal with the Minnesota PUC by the end of 2025.
As part of the settlement, another filing with state regulators will come due in late 2025. Xcel agreed to devise a new model for planned and scaled distributed solar and storage capacity procurement and file it at the commission by Oct. 3, 2025.
Finally, Xcel and parties agreed the utility would try to bolster rates of participation in its energy efficiency programs for its low-income customers, track data and report on results in its next IRP.
Xcel said the agreement will allow it to reliably ensure an up to 88% carbon emissions reduction by 2030 from a 2005 baseline. The company also said the new plan unlocks tax credit savings from the Inflation Reduction Act for renewables and energy storage.
Xcel said it expects a final decision on the settlement from the Minnesota PUC in early 2025.
Leadership at the clean energy nonprofits had good things to say about the shift in resource planning.
“This joint effort marks major progress in Xcel’s and Minnesota’s energy transition,” Fresh Energy Executive Lead of Policy Allen Gleckner said in a press release. “All the parties involved are working [toward] the same goal: reliably decarbonizing our state’s electricity.”
“In addition to the 3.6 GW of new clean energy projects in the short term, we are very excited to see significant battery storage projects be selected. Storage is a real game-changer,” added Peder Mewis, Clean Grid Alliance’s regional policy director. “Among other things, it will help during extreme weather conditions and is critical for maintaining reliability and meeting Minnesota’s clean energy standard.”
Minnesota Center for Environmental Advocacy Climate Program Director Amelia Vohs called the settlement a “great outcome for the climate.”
“This plan invests in innovation that maximizes value for customers, creates jobs and supports the communities we serve,” said Ryan Long, president of Xcel Energy in Minnesota, South Dakota and North Dakota. “We’re making great progress toward our vision for reliable, affordable, 100% carbon-free electricity, and we appreciate the support of our stakeholders on an agreement that allows us to keep building the clean energy economy of the future.”
