The Minnesota Solar Energy Industries Association (MnSEIA), the Solar Energy Industries Association (SEIA), and the Coalition for Community Solar Access (CCSA) issued statements on Thursday criticizing the Minnesota Public Utilities Commission’s decision to approve Xcel Energy’s Capacity*Connect distributed-storage proposal. The organizations argue that while Minnesota has historically been a leader in grid innovation, the newly approved program represents a major missed opportunity to advance fair and cost-effective clean-energy development in the state.
The Capacity*Connect plan, authorized as a pilot program, will allow Xcel Energy to deploy up to 200 megawatts of utility-owned battery storage with a budget of $430 million. However, clean-energy groups say the framework offers no meaningful avenue to gather comparative data from third-party developers or competitive market participants—data they believe is essential for building an efficient and resilient long-term storage strategy. They also criticized the process for excluding independent developers and trade associations from key discussions, leaving industry expertise on interconnection and project development largely unconsidered.
In a statement, Sarah Whebbe, Director of Policy & Regulatory Affairs at MnSEIA, said that although the organization recognizes Xcel’s attempt to invest creatively in the distribution system, the model itself is fundamentally flawed. She argued that giving operational control to a single partner shuts out Minnesota’s established solar and storage developers and undermines the competitive environment needed to deliver a fair clean-energy transition. Whebbe warned that the approach will ultimately raise costs for customers while limiting clean-energy choices available to Minnesota residents.
The organizations also raised concerns about financial risk and transparency. Unlike other states’ distributed-storage programs, CapacityConnect places full investment risk on ratepayers rather than leveraging private capital. Because the batteries will be treated as utility-owned capital assets, Xcel Energy is guaranteed a profit regardless of performance.
As a result, CapacityConnect becomes the only approved distributed-storage program in the country with a cost-benefit ratio below one—meaning the projected costs exceed the expected benefits. The groups further noted that during the approval hearing, Xcel introduced updated financial calculations that had not been shared with intervening parties beforehand, limiting the opportunity for a complete review of the methodology.
Andrew Linhares, Midwest Director of State Affairs at SEIA, said the newly approved program bears little resemblance to successful energy-storage models in other states, where competitive markets help ensure that ratepayers receive the most affordable and effective solutions. Instead, he argued, Capacity*Connect shifts financial risks onto customers who will be required to pay for the projects regardless of outcomes.
Additional criticism was directed at the decision to designate Capacity*Connect as a pilot while simultaneously restricting participation to Xcel Energy and its chosen partner, Sparkfund. Clean-energy groups say that by excluding third-party developers, the program prevents the state from gathering the open-market data necessary to evaluate cost-effective approaches for future energy-storage expansion.
They also objected to the Commission’s decision to exempt Xcel from the standard interconnection queue, citing concerns that doing so creates a double standard and disadvantages developers already waiting for interconnection approvals. According to the organizations, if streamlined procedures are essential to keep projects on schedule and within budget, those same rules should be applied equally to all distributed-energy resources.
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