State energy watchdogs say Xcel's megasolar project is too pricey

Xcel Energy has more to worry about than deteriorating solar economics for its $575 million megafarm planned in Becker, Minn.

The Minnesota Department of Commerce and the Minnesota Attorney General's Office say the project is overpriced and wasn't bid properly, leaving ratepayers overpaying for solar power.

Commerce and the AG's Office have recommended that the Minnesota Public Utilities Commission (PUC) reject the Sherco solar project as currently structured.

The project's per-kilowatt-hour cost "is dramatically higher than recent utility-scale solar projects in the region," the AG's Office said in a PUC filing. "If the project were approved, customers would be forced to pay hundreds of millions of dollars more over the life of the project than if Xcel had instead procured competitively priced solar generation."

Xcel rejects those conclusions.

"We think our project has always been a well-priced project for our customers and delivers great value for the energy transition," said Christopher Clark, the company's president for Minnesota and the Dakotas. "We hope that as we provide more information to the Department of Commerce and the attorney general that they will reassess."

The Sherco solar project would help replace some of the power lost when Xcel closes its three massive coal generators in Becker, which will occur between 2023 and 2030.

The Commerce Department and the Attorney General's Office said Xcel's bidding process yielded only three bids, including the company's own. The other two were tossed because they did not meet bidding requirements.

"Xcel's RFP [request for proposal] was poorly designed, creating unnecessary limits which reduced the number of bids received and as a result likely inflated the overall price," the Commerce Department concluded.

The Attorney General's Office said Xcel "undermined" the competitive process by restricting the project's location to the Sherco site; and by restricting the project's ownership to the company itself.

The Sherco project would utilize Xcel's grid interconnection rights and infrastructure in Becker — an advantage, the company says. With those links in place, the project would avoid long and potentially costly delays that often come with connecting to the regional grid.

And federal rules require Xcel to own any project that uses existing grid interconnection rights at Sherco, the company said.

"We have valuable transmission rights at the Sherco plants," Clark said. "We need to own that project."