St. Paul, MN — The Minnesota Public Utilities Commission (PUC) approved Xcel Energy’s Phase 2 of their Capacity*Connect project, a program designed to deploy a network of community-based battery energy storage systems. This initiative will create a first-of-its kind, utility-owned virtual power plant (VPP) to enhance grid reliability, support clean energy goals, and provide direct economic benefits to local communities.
The project will deploy up to 200 megawatts (MW) of battery energy storage systems across the distribution grid by 2028. Unlike traditional large-scale power plants, these medium-sized batteries (1-3 MW each) are sited closer to where people live and work, allowing the grid to be more flexible and resilient.
“Capacity*Connect represents a vital step toward modernizing the energy grid and meeting the growing electricity needs of our communities,” said Commissioner Ham. “By leveraging innovative battery technology and Virtual Power Plant models, we are not only ensuring a more reliable and resilient system for all Minnesotans but also creating a more equitable energy future that delivers real value back to the communities."
The program includes commitments to equity and local workforce development. The Commission directed Xcel to consider placing energy assets in underserved communities and to partner with Building Strong Communities to expand access to construction careers.
The Commission also asked Xcel to report on whether lessons from its behind‑the‑meter VPP pilot project in Colorado could be applicable in Minnesota and help inform the state’s approach.
Xcel is required to provide regular status reports and a comprehensive evaluation of the program by an independent party. The Commission will ensure that the program continues to deliver maximum value to ratepayers while advancing Minnesota’s transition to a carbon-free energy future.
Full record information is available in Docket 25-378.
The Minnesota Public Utilities Commission regulates three cornerstone service industries in Minnesota's economy: electricity, natural gas and telephone. The Commission’s mission is to create and maintain a regulatory environment that ensures safe, adequate, and efficient utility services at fair, reasonable rates consistent with State telecommunications and energy policies. It does so by providing independent, consistent, professional, and comprehensive oversight and regulation of utility service providers. Learn more at mn.gov/puc.
