Minnesota Advances Battery Storage but Leaves Virtual Power Plant Savings Untapped

The Minnesota Public Utilities Commission approved Xcel Energy’s CapacityConnect Phase 2 yesterday, a utility-owned battery storage program that will add 50 to 200 megawatts to the energy grid. While the Commission did not move forward with a behind-the-meter virtual power plant program that would connect more customers and lower energy bills, its decision requires Xcel to quantify the benefits that the distributed batteries deployed through the program bring to the grid.  This groundbreaking analysis will set the stage for more fully and fairly valuing the benefits of local clean energy resources, like rooftop solar and batteries, in Minnesota. 

In particular, the Commission ordered Xcel to develop Xcel-specific estimates of the benefits these distributed energy resources provide to the energy grid by November 2027 and to submit the report as part of its Integrated Distribution Plan. Additionally, the order requires Xcel to submit a comprehensive evaluation plan within 180 days explaining how it will measure cost savings, grid benefits, and how these resources can best support both the larger power system and local networks. These requirements will produce the first Minnesota-specific, utility-developed framework for measuring the value of batteries connected to the energy grid and will help guide future CapacityConnect phases and how all future distributed energy resources are valued.

Will Kenworthy, Vote Solar’s Midwest Regulatory Director, issued the following statement: 

“Approving Xcel’s CapacityConnect Phase 2 program marks positive progress in bringing more battery storage onto Minnesota’s energy grid, but Minnesota is still leaving meaningful energy bill savings on the table by not advancing a virtual power plant program that would help more customers maximize their energy resources. Still, this decision lays important groundwork for the future. By requiring Xcel to define the grid value of all types of distributed energy resources, Minnesota is taking a key step toward fully recognizing the value of local clean energy like solar. 

“Vote Solar will continue to work with partners to ensure distributed resources are fully valued and to accelerate the deployment of virtual power plants and other local clean energy solutions that can reduce emissions and lower energy costs for all.”