Minnesota-related energy projects receive $614M in federal funding

Minnesota utility projects — from wildfire prevention to getting more clean energy connected to grids — landed $614 million in federal funding this week.

The money is part of $3.5 billion in federal infrastructure funding for 58 projects across the country announced this week to strengthen electric grid resilience as extreme weather events such as the deadly Maui and California wildfires continue to strain the nation's aging transmission systems.

The largest grant, $464 million, will go toward improving five transmission projects across seven Midwestern states. The Minnesota Department of Commerce led the effort to secure the money along with Minneapolis-based Great Plains Institute and two regional grid operators, the Midcontinent Independent System Operator (MISO) and the Southwest Power Pool (SPP).

Xcel Energy will see a big chunk of the money for projects including a $600 million to $700 million new power line in western and central Minnesota it is building with Fergus Falls-based Otter Tail Power.

Xcel also received a separate $100 million Department of Energy grant designated for wildfire mitigation and grid resiliency.

"We recognize that the year-round risk of wildfires has grown, along with the severity of storms and other weather events that threaten the grid," said CEO Bob Frenzel.

Although Xcel was not found at fault in the official investigation, a sparking power line was one of the causes in 2021 of Colorado's most destructive wildfires, which destroyed 1,000 homes and left two people dead.

The Minneapolis-based utility said it would use the money in Minnesota and elsewhere to add fire-resistant coatings to 6,000 wood poles, move high-risk distribution circuits underground and improve equipment safety features.

The funding announced this week by U.S. Energy Secretary Jennifer Granholm is the largest federal investment ever in grid infrastructure, supporting projects that will harden electric systems and improve energy reliability and affordability. The federal spending, combined with money promised by private partners, could result in up to $8 billion nationally to upgrade the grid, Granholm said.

"The grid, as it currently sits, is not equipped to handle all the new demand" and withstand natural disasters and extreme weather worsened by climate change, Granholm said at a news conference. "We need it to be bigger, we need it to be stronger, we need it to be smarter" to bring a range of renewable energy projects online and meet the Biden administration's goal of reaching 100% clean electricity by 2035, she said.

The funded projects, including those in Minnesota, still have several steps to go and need more investment before they come to fruition. The funds are structured as a reimbursement program over the next eight years.

"The federal government is not cutting us a $464 million check tomorrow," said Jessica Burdette, director of energy reliability and security for the Minnesota Department of Commerce.

Burdette said that specific federal funding has not yet been determined for any of the projects. The money is passed from the Department of Commerce to the grid operators and then to the utilities.

Contract details will need to be sorted out through negotiations and the projects have numerous regulatory steps.

Still, the federal money is a big step.

"This is an investment in our climate, community health and family pocketbooks," said Gov. Tim Walz in a statement, referring to the $614 million coming for Minnesota-related projects.

The increase in wind and solar power sources is straining transmission capacity. Goals for the new high-voltage lines include lowering energy costs for customers and improving the overall resiliency of the grid.

"Our energy system is going through a historic transformation. It's going to increase the capacity of our grid," Burdette said.

Duluth-based Minnesota Power received a $50 million grant to modernize its high-voltage direct current (HVDC) transmission system.

Sens. Amy Klobuchar and Tina Smith helped secure the funding for the Minnesota projects.

The nation's existing power grids are not built to handle the growing energy demand, a fact that is complicated by the intermittent nature of renewables, since energy isn't generated when the sun doesn't shine or the wind isn't blowing.

"Our outdated grid has been in need of an update for a long, long time,″ said Mitch Landrieu, a White House senior adviser who coordinates implementation of the 2021 infrastructure law signed by President Joe Biden.

"Older equipment can overload during extreme heat and cold when power is needed most," he said. "And it's more likely to fail when communities are washed out by historic floods and decimated by stronger storms.''

Jonathan Foley, executive director of climate group Project Drawdown, said the projects are "exactly the kind of thing that we should be doing: promoting renewables, better storage and better electrical grids for a better, greener, more resilient future."

"As we sadly saw in California, aging electricity infrastructure can cause catastrophic loss of life, property, natural areas and forest fires," he said.

The Associated Press contributed to this report.