Environmental Leadership
January 4, 2024

Xcel Energy retires first coal unit at Minnesota power plant

Company on track to exit coal by 2030

Xcel Energy is marking a major step toward its vision of delivering 100% carbon-free electricity in Minnesota by 2040 as the company retired one of three coal units at the Sherburne County Generating Plant, or Sherco, over the weekend. 
For decades, Sherco has held the distinction as Minnesota’s largest power plant. Xcel Energy plans to retire Sherco’s remaining coal-fired units in 2026 and 2030, marking the company’s full exit from coal. The plant site itself is central to Xcel Energy’s clean energy transition with investments in solar, battery storage and new transmission lines. 
“Sherco has served our customers reliably for nearly 50 years, and we see tremendous potential for the plant site in the Upper Midwest’s energy future,” said Ryan Long, president of Xcel Energy—Minnesota, South Dakota and North Dakota. “Just as we’re taking a phased approach to decommissioning the coal units, we’re building replacement generation in phases to support clean, reliable and affordable energy for our customers.” 
Xcel Energy was the first major energy provider in the U.S. to set a vision for delivering 100% carbon-free electricity to its customers. By reusing infrastructure at the Sherco site, the company will deliver increasingly clean energy to its customers across the Upper Midwest in a reliable and affordable way.  

Michelle Neal, Sherco’s plant director, points to the Sherco substation from the roof of Unit 3.
Clean energy investments at Sherco 
Xcel Energy is currently building the largest solar facility in the Midwest adjacent to the Sherco site. Construction is underway on the first two phases of the Sherco Solar project, totaling 460 megawatts, while an additional 250-megawatt solar array awaits site permit approval. Once complete, the combined 710 megawatts would generate enough electricity to power more than 150,000 homes each year on average and fully replace the capacity of the coal-fired Unit 2 that retired Dec. 31. 
Xcel Energy will also build a 10-megawatt, 100-hour battery storage facility at the Sherco site as a demonstration project. The storage system, developed by Massachusetts-based Form Energy, will allow Xcel Energy to enhance reliability by storing wind and solar power to distribute during periods of lower renewable production. Earlier this year, the project received an award of up to $35 million from the U.S. Department of Energy and a $20 million grant commitment from the Breakthrough Energy Catalyst fund. 
The company is proposing to build the Minnesota Energy Connection transmission line, which will link at least 2,000 megawatts of low-cost wind and solar resources in southwest Minnesota to the grid. By reusing existing grid connections at Sherco, Xcel Energy will make the project cost effective for customers. 
Sherco Unit 2, built in 1977, will become a synchronous condenser, a piece of equipment that manages system stability as renewable energy increases, providing reliable electricity for customers. 
Smooth transition 
Xcel Energy is committed to a smooth transition for its employees at the Sherco plant, who have played a vital role in powering the region for decades. The company has transitioned other Minnesota coal plants without layoffs and expects to accomplish this again at the Sherco facility. 
“There’s a lot of life left at the Sherco site, and our dedicated co-workers will manage the transition over the next decade,” said Michelle Neal, Sherco’s plant director. “The plant, and all those who keep it running well, have served as the backbone of the region’s generation fleet for decades.”  
The new energy investments at the Sherco plant site will provide economic benefits in Becker and the surrounding area: 
  • Sherco Solar: Nearly 400 union construction jobs, 18 ongoing operations and maintenance jobs, and an estimated $350 million in local economic benefits through payments to landowners and local governments.  
  • Battery storage: 15 to 20 union construction jobs. 
  • Minnesota Energy Connection: Hundreds of jobs to build the transmission line and new wind and solar resources plus an infrastructure investment of more than $1 billion for the region. 
Xcel Energy is also working with the state and local communities to bring new jobs and investments to areas affected by coal plant retirements.