The Sherco Clean Repowering: How One Community Turned a Coal Plant into a Hub for a New Clean Economy

The Sherco coal plant in Minnesota transitioned to a clean energy hub by replacing retired capacity with 710 MW of solar and a 10 MW/1,000 MWh iron-air battery system. This transition was enabled by Inflation Reduction Act (IRA) incentives, the use of a 'generator replacement' process to bypass interconnection queues, and early community and labor engagement. The project serves as a model for 'clean repowering,' which RMI estimates could deploy 250 GW of clean energy and save ratepayers $12 billion nationwide.

• The Sherburne County Generating Station (Sherco) is transitioning from a 2,400 MW coal facility to a clean energy hub. The replacement for the retired Sherco 2 unit includes 710 MW of solar and a 10 MW/1,000 MWh Form Energy iron-air battery system, both utilizing existing interconnection rights.
• The transition was accelerated by the 'generator replacement' process, which allows the transfer of interconnection rights from a retiring plant to new resources. This mechanism can reduce interconnection timelines from a median of five years to less than one year.
• Federal incentives from the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL) were critical for financial viability. Specifically, the project utilized the energy community tax credit bonus, which increases the Production Tax Credit (PTC) and Investment Tax Credit (ITC) by 10 percent and 10 percentage points, respectively. The Form Energy battery also received a $35 million grant from the Department of Energy’s Office of Clean Energy Deployment and a $10 million private grant from Breakthrough Energy Catalyst.
• Xcel Energy implemented a workforce and community transition strategy that included a pledge to avoid layoffs for Sherco employees, providing upskilling and reskilling opportunities. The new solar and storage projects committed to union labor, creating over 400 construction jobs and generating more than $350 million in local economic benefits.
• Minnesota state policy, specifically Senate File 4, mandated a 100 percent carbon-free electricity standard by 2040. This law requires the Public Utilities Commission (PUC) to prioritize high-paying jobs, unionization, worker transition, air pollution reduction, and affordability for low-income ratepayers.
• RMI analysis suggests that 'clean repowering' using similar interconnection processes and IRA incentives could lead to the buildout of 250 GW of economic clean energy resources across the US, potentially saving ratepayers $12 billion and reducing baseline electricity emissions by 25 percent.

APA

RMI (2024). The Sherco Clean Repowering: How One Community Turned a Coal Plant into a Hub for a New Clean Economy. https://rmi.org/resources/the-sherco-clean-repowering-how-one-community-turned-a-coal-plant-into-a-hub-for-a-new-clean-economy/

Chicago

RMI. The Sherco Clean Repowering: How One Community Turned a Coal Plant into a Hub for a New Clean Economy. 2024. https://rmi.org/resources/the-sherco-clean-repowering-how-one-community-turned-a-coal-plant-into-a-hub-for-a-new-clean-economy/.

Wikipedia

{{cite report |author=RMI |title=The Sherco Clean Repowering: How One Community Turned a Coal Plant into a Hub for a New Clean Economy |date=8 November 2024 |url=https://rmi.org/resources/the-sherco-clean-repowering-how-one-community-turned-a-coal-plant-into-a-hub-for-a-new-clean-economy/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2024sherco, author = {{RMI}}, title = {{The Sherco Clean Repowering: How One Community Turned a Coal Plant into a Hub for a New Clean Economy}}, institution = {RMI}, year = {2024}, month = nov, url = {https://rmi.org/resources/the-sherco-clean-repowering-how-one-community-turned-a-coal-plant-into-a-hub-for-a-new-clean-economy/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }