The massive Xcel Energy Sherco Solar project planned in Baker, Minnesota will bring huge benefits from climate change, but will be expensive.
Earlier this year, the Minnesota Department of Commerce and the state attorney general opposed the project, which costs about $575 million. They concluded that the Xcel bidding process was paying excessive fees to ratepayers.
Since then, the Commerce Department and Excel have reached an agreement on a "price cap" for solar generation, which the AG Office also agreed to.
"This cap is intended to ensure that consumers don't pay more than the market can bear," said Kevin Lee, the Commerce Department's deputy energy commissioner.
However, the current cost of the project, which exceeded the original estimate of $575 million, was not disclosed because Minneapolis-based Xcel considers it a "trade secret."
The Public Utilities Commission (PUC) is expected to vote Thursday on a solar park that would help offset power losses when Xcel shuts down three large Sherco coal-fired power plants in Baker from 2023 to the end of 2030.
If approved by the PUC on Thursday, Xcel expects the Sherco solar plant to be operational by the end of 2024. The project is widely supported by clean energy groups, local governments and trade unions.
PUC staff recently recommended that commissioners approve the plant, primarily because of its "economic and environmental benefits."
However, PUC staff cited uncertainty about the final cost of the project and concerns about the solar farm's "increasing impact on ratepayers" combined with other important items on the Xcel agenda.
The company has proposed a $500 million transmission line from Baker to southern Minnesota, as well as several other solar projects that could cost tens of millions of dollars.
Xcel is in the process of a PUC case; Calling for a 21% increase over three years.
Xcel plans to build a 3,497-acre solar farm in the Baker area that will generate 460 megawatts of electricity from sunlight. Currently, the largest solar field in Minnesota is the 100-megawatt Xcel plant in Chisago County.
According to Xcel, Sherco Solar will be the largest solar plant in the Midwest and one of the largest in the nation.
"Sherco Solar may be the largest renewable energy development in Minnesota history," the PUC said in a statement
The Xcel solar power plant will effectively eliminate 300,000 tons of carbon emissions per year. That would help revitalize Baker and Sherburne counties, which would lose significant tax revenue if the Xcel coal plant closes.
Sherco Solar will also be a major construction project that will create about 900 union jobs, Xcel said. Its permanent staff is approximately 14 people. (Sherco employs 230 people at the coal-fired plant, up from 311 in 2015 when Excel began planning to close it.)
"We think [Sherco Solar] provides great value for our customers," said Christopher Clark, president of Xcel in Minnesota. "We believe this project is a very low-cost project."
The company recently estimated that project costs could be cut by at least 20% thanks to a new renewable energy tax credit included in the landmark federal energy law passed in August.
Before the law was passed, Xcel estimated that ratepayers would pay $5.60 to $7.90 per year for Sherco Solar at peak prices for at least 15 years between 2026 and 2031, or for residential customers.
Supply chain shortages and inflation have plagued the solar industry, like many other industries, over the past year.
In April, Xcel put Sherco Solar on hold. Since April 2021, solar project prices have risen 25%, including an 8% increase in the second quarter of 2022, the PUC said in a July statement. The price of Sherco Xcel has also gone up.
In the same document, Xcel ended Sherco's "position" and asked the PUC to vote on the project as soon as possible, saying it had agreed to a price cap with the Commerce Department.
The hard price cap is believed to be related to the bid prices Xcel is currently accepting for several other solar parks with a combined capacity of about 900 megawatts, in addition to Sherco Solar.
However, the expected price of Sherco Solar has not been revealed. Xcel considers it a trade secret that, if disclosed, could undermine the bidding process for its additional solar projects.
Bidders may see Sherco Solar's price as the lowest — "and we won't get the lowest price," Clark said.
The Star Tribune has called on the PUC to formally release an updated fee for the project. The PUC responded Tuesday that Xcel's privacy was protected, noting Xcel's concerns that the current solar bidding process could be compromised.
Correction: A previous version of this story contained incorrect figures for estimated taxpayer costs. Before a higher federal renewable energy tax credit was approved this year, Xcel estimated the Sherco Solar project would cost residential customers $5.60 to $7.90 per year for at least 15 years. .
