Xcel Energy has announced plans to build the Midwest’s largest battery energy storage system (BESS) at the Sherco Energy Hub in central Minnesota. The initiative is part of a broader effort to enhance energy reliability, support clean power goals, and expand investments across the region.
“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–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.”
Key Project Components
The proposal, filed with the Minnesota Public Utilities Commission (PUC), includes several major developments:
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Sherco Energy Hub (Becker, MN)
Expansion of previously approved battery storage from 300 MW to 600 MW.
The Sherco coal plant, adjacent to the site, is set to retire by 2030. -
Blue Lake Facility (Shakopee, MN)
Addition of 135.5 MW of battery storage capacity. -
Sherco Solar Expansion (Clear Lake Township, MN)
Installation of a new 200 MW solar array, further strengthening renewable integration.
Construction Timeline and Technology
If approved, construction is scheduled to begin in 2026, with operations starting by late 2027.
The projects will use lithium iron phosphate (LFP) battery technology, known for its safety, durability, and efficiency. LFP batteries can deliver four-hour discharge cycles and recharge quickly, supporting daily grid operations.
These batteries will reuse existing grid connections, enabling storage and distribution of energy generated from Xcel’s wind, solar, nuclear, and natural gas facilities across the Upper Midwest.
Economic and Community Impact
The new energy storage facilities are expected to bring substantial economic benefits:
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Sherco Projects:
Over 150 union construction jobs.
Approximately $200 million in local tax payments. -
Blue Lake Project:
Around 55 construction jobs.
About $60 million in local tax payments.
“For half a century, LIUNA members have kept the lights on in Minnesota by building and maintaining Sherco coal units,” said Joel Smith, President and Business Manager, Laborers’ International Union of North America – Minnesota and North Dakota. “Now, we’re proud to help transform it into a clean energy hub—supporting Minnesota’s climate goals while sustaining local jobs.”
Federal Tax Credits and Cost Savings
The projects are expected to qualify for federal clean energy tax credits, which will reduce project costs and benefit consumers directly:
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Blue Lake Battery: 30% cost offset.
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Sherco Battery and Solar Projects: 40% cost offset (qualifying as an energy community).
Xcel Energy has committed to passing these savings directly to customers in the form of lower electricity bills.
Quick Facts: The Midwest’s Largest BESS
Project Name: Sherco Energy Hub Battery Storage Project
Developer: Xcel Energy
Total Battery Capacity: 735.5 MW (600 MW Sherco + 135.5 MW Blue Lake)
Solar Expansion: 200 MW Sherco Solar (Clear Lake Township)
Battery Type: Lithium Iron Phosphate (LFP)
Construction Start: 2026
Operational Date: Late 2027
Economic Impact: 200+ union jobs; $260 million in local tax revenue
Tax Credits: 30% (Blue Lake), 40% (Sherco projects)
PUC Oversight: Minnesota Public Utilities Commission
