Capacity*Connect, a virtual power plant proposal by Xcel Energy that has divided the distributed energy community, won approval from the Minnesota Public Utilities Commission (Docket 25-378) last week.
Opponents—primarily solar groups, distributed energy developers, and policy advocates—argued that the $153 million to $430 million utility-run virtual power plant program undercuts competitive markets.
Meanwhile, proponents, including Jigar Shah, an influential industry figure and former head of the Department of Energy Loan Program, say it is an important test case in using distributed energy at scale.
Following the April 2 approval, the Minnesota Solar Energy Industries Association (MnSEIA), the Solar Energy Industries Association (SEIA), and the Coalition for Community Solar Access (CCSA) said in a joint statement that program shifts financial risks onto ratepayers while shutting out private capital.
They also said the utility program provides no meaningful pathway to collect comparative data from third-party developers or competitive market participants.
“Although we appreciate Xcel’s creative step toward investing in the distribution system, this is a flawed model,” said Sarah Whebbe, director of policy & regulatory affairs at MnSEIA. “Giving control to just one partner leaves out Minnesota’s experienced solar and storage developers. A truly fair and equitable clean energy future requires open market competition, not a closed system that sidelines local businesses. This approach will add costs and limit the options of Minnesotans who want more clean energy choices.”
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