Department of Energy Awards Xcel Energy up to $70M for Long Duration Energy Storage

Xcel Energy has received a grant of up to $70 million from the U.S. Department of Energy (DOE). The award will partially fund two long duration energy storage systems in Minnesota and Colorado. Each demonstration-scale system will be a 10 megawatt/1,000 megawatt-hour iron-air battery developed by Massachusetts-based Form Energy.
Department of Energy Awards Xcel Energy up to $70M for Long Duration Energy Storage
Courtesy of Form Energy

The batteries will be located at the sites of two retiring Xcel Energy coal plants: the Sherburne County Generating Station in Becker, Minnesota, and the Comanche Generating Station in Pueblo, Colorado. Once operational, the systems will allow Xcel Energy to store renewable energy such as solar and wind when it is being produced and then later distribute the energy during periods of lower renewable production.

“As we explore cutting-edge technologies to accelerate our journey toward 100% carbon-free electricity, we are committed to also keep our services affordable for our customers,” said Bob Frenzel, chairman, president and CEO of Xcel Energy. “The Department of Energy grant provides crucial financial support for projects that will provide reliable, low-cost renewable energy to the communities we serve.”

While most existing battery technologies serve fewer than eight hours of energy storage, Form Energy’s iron-air batteries deliver electricity for up to 100 hours. The long duration energy storage systems will strengthen the grid against day-to-day and week-to-week variability of renewable energy.

“As we build our clean energy future, reliable energy storage systems will play a key role in protecting communities by providing dependable sources of electricity when and where it’s needed most, particularly in the aftermath of extreme weather events or natural disasters,” said U.S Secretary of Energy Jennifer M. Granholm.

“Thanks to President Biden’s Investing in America agenda, DOE is supporting game-changing energy storage projects across the nation—laying the foundation for the innovative solutions we need to ensure stronger, more resilient communities.”

Separate from the Department of Energy funding, Xcel Energy received a $20 million grant commitment in April from the Breakthrough Energy Catalyst fund for emerging climate technologies that reduce emissions and accelerate the clean energy transition.

The Breakthrough grant provides $10 million each for the Minnesota and Colorado battery systems, subject to the satisfaction of certain funding conditions. In addition to the grants, Xcel Energy plans to use provisions in the federal Inflation Reduction Act, such as standalone storage tax credits, to further lower the cost of the iron-air batteries.

The Minnesota Public Utilities Commission previously approved the project with the support of the Minnesota Department of Commerce. Construction of the battery system in Minnesota — to be located near one of the largest solar developments in the U.S., the upcoming 710 megawatt Sherco Solar installation — will start in the second quarter of 2024.

Pending approval from the Colorado Public Utilities Commission, work on the Colorado battery system could begin in late 2024. The projects are expected to support 15 to 20 construction jobs in each state.

The Department of Energy grant is contingent on negotiation and project logistics.

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