Xcel Energy Inc. is seeking approval from the Minnesota Public Utilities Commission to add 768 MW of solar generation and 855.5 MW/3,422 MWh of battery storage in its Upper Midwest service area over the next several years.
In an Oct. 31 filing, Xcel requested a decision by mid-February 2026 on the portfolio of utility-owned projects and power purchase agreements with independent developers. The proposed timeline aims to secure Xcel's bid to capture favorable pricing before federal tax credits for some clean energy technologies expire.
The sweeping budget legislation signed into law by President Donald Trump in July, along with safe-harbor guidance issued by the US Treasury Department in August, "significantly narrows the pathway to eligibility and demands more rigorous documentation and project execution," Xcel said in the filing.
To remain eligible for tax credits, solar and wind projects that do not begin construction by July 4, 2026, must enter service by the end of 2027, the utility noted.
"This narrowing eligibility window has already begun to reshape market behavior," Xcel added, citing rising PPA prices for wind and solar since the law's enactment.
While energy storage projects may continue to qualify for federal tax credits into the mid-2030s, the legislation, dubbed the One Big Beautiful Bill Act, introduces restrictions on components sourced from foreign entities of concern starting in 2026.
"The combined effect of these provisions is a narrowing window of opportunity for developers to secure tax credit eligibility," said Xcel, which operates legally as Northern States Power Co. in Upper Midwest states. "Projects currently in development must accelerate permitting, interconnection, and procurement activities to meet the statutory deadlines."
'Midwest's largest battery energy storage'
The proposals stem from a 2024 solicitation for new resources needed by 2029 and include five utility-scale battery storage systems, five large-scale solar farms and two portfolios of distributed photovoltaic projects.
Among the largest developments are solar and storage facilities near Xcel's coal-fired Sherco power station in Becker, Minnesota, which is scheduled to retire by the end of 2030.
The 300-MW/1,200-MWh Sherco South BESS is scheduled to begin construction next year, pending PUC approvals, and enter service in late 2027. The project will double the battery storage capacity previously approved at the site, Xcel said in a Nov. 3 statement. The company called the planned facility "the Midwest's largest battery energy storage site."
"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 for 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 utility also proposed the 200-MW Sherco Solar 4 project in Clear Lake Township, Minnesota, estimated to start commercial operations in October 2029, as part of a complex of solar farms surrounding the coal plant.
Xcel plans to build the 135.5-MW/542-MWh Blue Lake BESS in Shakopee, Minnesota, to replace retiring generation at its Blue Lake generating station, according to the filing. If approved, construction would begin next year and is expected to come online in 2027.
Xcel said it expects to offset 30% of the Blue Lake battery project costs and 40% of the Sherco solar and storage costs with federal tax credits.
Power purchase agreements
The company also proposed PPAs with NextEra Energy Inc. for two battery storage projects: the 120-MW/480-MWh Crowned Ridge BESS in Codington County, South Dakota, planned near its Crowned Ridge Wind complex for late 2027, and the 100-MW/400-MWh Mayhew Lake battery system in Benton, Minnesota, targeted for completion in 2028.
Tenaska Energy Inc. is contracted to supply Xcel with power from its 200-MW/800-MWh Crane BESS in Olmsted County, Minnesota, by the end of 2028.
Xcel's filing also includes a PPA for the planned 99-MW Grant Solar project in McCook County, South Dakota, and a 15 MW expansion of the Fillmore County Solar Project in Minnesota, where Xcel already has 30 MW under contract. Both projects were developed by National Grid Renewables, which recently rebranded as Geronimo Power LLC following its sale to Brookfield Asset Management Ltd. in May.
Additionally, Xcel plans to acquire two portfolios of distributed PV projects in Wisconsin from OneEnergy Inc. Portfolio 1 includes six projects totaling 41 MW, and Portfolio 2 consists of 33 MW at another six facilities. The projects, however, remain under negotiation and Xcel's operating arm in Wisconsin "will seek any necessary project approvals from the Public Service Commission of Wisconsin," the filing said.
