Xcel Energy Plans First-of-Its-Kind Distributed Capacity Procurement in Minnesota

Xcel Energy has proposed a program to build a distributed battery storage network across Minnesota to help meet growing electricity demand and improve grid operations.

Under the Capacity Connect plan, Xcel Energy would install up to 200 megawatts of battery storage at strategically selected locations by 2028. Working in partnership with Sparkfund, these distributed energy resources are intended to support efficient use of existing infrastructure, maintain reliable service, and contribute to local employment.

“We’re focused on supporting economic growth and the needs of our communities by building out and modernizing our energy grid,” said Ryan Long, president of Xcel Energy–Minnesota, North Dakota and South Dakota. “We believe distributed energy resources are an important part of that strategy. They will complement our current plans for additional renewable and firm dispatchable generating resources to meet our customers’ needs.”

Xcel Energy will integrate the battery storage into its system operations by charging when energy is less expensive and dispatching energy during peak periods, aiming to optimize grid performance. The company plans to choose customer sites — such as commercial, industrial, or nonprofit hosts — including in environmental justice communities. Each host would receive payments for participation. Typical battery installations would range from one to three megawatts per site (about the size of a shipping container).

“By storing energy when it’s cheap, delivering it when it’s needed most and placing assets where they maximize grid value, Xcel Energy is delivering reliable energy to customers today and building a grid that is ready for tomorrow,” said Pier LaFarge, CEO of Sparkfund. “Sparkfund will help Xcel Energy deploy distributed energy resources to meet growing customer energy needs, support economic growth in Minnesota and unlock the full value of the U.S. electric grid.”

This distributed capacity procurement is intended to contribute toward Minnesota’s energy storage goals. Xcel Energy’s Upper Midwest Energy Plan, recently approved, calls for installing 600 megawatts of energy storage by the end of 2030, and the proposed program would advance that effort.

Xcel Energy and Sparkfund plan to monitor performance, costs, and customer experience as the deployment scales, to ensure the approach remains cost-effective while contributing to a reliable, safe, and clean grid.