Environmental Leadership
December 18, 2023

Taking action to reduce emissions from our natural gas system in Minnesota

Innovation Plan includes $58 million in new projects to spur economic and climate benefits

Xcel Energy is moving ahead with its plans to be a net-zero energy provider by 2050 with its Dec. 15 proposal of a $58 million, five-year Natural Gas Innovation Plan in Minnesota. 
The proposal includes a portfolio of innovative pilot projects across a broad array of technologies that, if scaled up in the future, have the potential to significantly reduce carbon emissions from the natural gas system. The plan also includes a focus on local benefits, jobs and workforce development, equity, energy security, and keeping costs affordable for customers. 
“Xcel Energy shares Minnesota’s bold vision for a clean energy future. To achieve that vision, we need to use every tool we have,” said Chris Clark, president of Xcel Energy—Minnesota, South Dakota and North Dakota. “This plan moves us toward a cleaner natural gas system while continuing to serve our Minnesota customers with reliable, affordable energy to power their lives.” 
If approved by the Minnesota Public Utilities Commission, the proposal would reduce or avoid approximately 54,000 metric tons of carbon dioxide emissions on a lifecycle basis annually across upstream production, our natural gas distribution system, and customer energy use. This is equivalent to taking around 12,000 gasoline-powered vehicles off the road each year. 
Innovative pilot projects 
In 2021, Gov. Tim Walz and state lawmakers approved the Natural Gas Innovation Act (NGIA), giving energy providers a new tool to pilot innovative technologies that reduce emissions from the natural gas system. Xcel Energy’s plan is responsive to each of the requirements of the NGIA. The proposal includes: 
  • Using renewable natural gas (RNG) generated from livestock waste in western Minnesota and materials diverted from landfills in Shakopee and Inver Grove Heights. 
  • A clean hydrogen project at the Sherco plant site in Becker to create steam for industrial use. The 5-megawatt electrolyzer would use renewable energy from solar or wind facilities to produce clean hydrogen. 
  • Advanced methane leak detection that will enable Xcel Energy to further reduce leakage from its distribution system.  
  • Carbon offsets related to forest management, tree planting and a biochar project that uses organic material diverted from a landfill.  
  • An approximately 500-ton ground source heat pump project to provide building heating and cooling in an urban area. 
  • Strategic electrification, including custom projects with energy modeling for large customers. 
  • A weatherization and strategic electrification program for tribal housing that includes manufactured homes at the Prairie Island Indian Community near Red Wing. 
Economic benefits, tax credits 
Xcel Energy’s plan will provide important economic benefits, including an estimated 417 construction and other jobs in Minnesota over five years. The plan also provides for local workforce development and training, helping to develop local expertise in growing careers such as renewable natural gas, hydrogen, district energy and strategic electrification.  
The proposal helps to maximize benefits from the federal Inflation Reduction Act. Approximately $18.6 million in anticipated tax credits and rebates will make the projects more affordable to customers. If Minnesota regulators approve the proposal, Xcel Energy expects the average residential natural gas bill impact will be about $1.39 per month from 2025-2029. 
“We are committed to keeping bills low for customers and assuring reliable service while achieving a clean energy future,” said Michael Lamb, senior vice president, distribution and gas. “Our plan will support a strategy to break down market barriers to a portfolio of diverse, clean and innovative heating technologies, including clean and renewable fuels, hydrogen, electrification and other clean heat options.” 
To meet its emissions reduction goals, Minnesota must begin investing in innovative technologies today. Xcel Energy’s proposed investment will prepare the state to ramp up markets and build the resources that are needed to meet its 2050 net-zero emissions target.  
Read more about Xcel Energy’s
net-zero vision for natural gas.