Google’s novel rate structure for funding clean energy is moving beyond the borders of Nevada — and funding what the hyperscaler describes as the largest capacity battery project ever announced.
On Tuesday, Google announced plans to power a new data center in Pine Island, Minnesota via a deal with Xcel Energy for 1.9 gigawatts of power, including a whopping 300 MW (or 30 gigawatt-hours) of long-duration storage capacity courtesy of Form Energy.
The project will be funded using a variation on the “clean transition tariff” that Google has used for two geothermal deals with NV Energy in Nevada, with enhanced geothermal company Fervo and, just last week, the conventional geothermal giant Ormat. Google created the CTT in 2024 as a way for hyperscalers (or other large loads) to pay extra for power from emerging technologies that would be too challenging or too expensive to develop under traditional utility incentives.
As Google takes the incentive structure beyond Nevada, though, the scope has evolved to encompass both emerging technologies and emerging funding structures. Rather than support a single emerging technology, like geothermal, it will fund an entire portfolio: 1.4 GW of wind, 200 megawatts of solar — and the 30 GWh Form Energy project that has had clean energy observers abuzz since the announcement.
The latter is a major milestone for the LDES company, which has been commercializing its operations for the last year. Its first 100-hour iron-air batteries hit the grid in October, also in Minnesota, for a Great River Energy multi-day storage project of 1.5 MW (or 150 MWh). That said, LDES generally has had an uphill climb, because electricity markets and regulatory structures in the U.S. don’t necessarily compensate long-term storage for its grid benefits.
For that reason, the CTT, which allows large loads who actively want those benefits to meet their power needs with intermittent renewables to subsidize the technology, is seemingly a good fit. The Xcel project’s capacity will be roughly than 200 times larger than that of the Great River one.
Mateo Jaramillo, Form CEO, said in a post on LinkedIn that the Xcel deal marks Form’s first direct deployment at a data center; he told Latitude Media last fall that the company has had to accelerate its scale-up in light of an unanticipated wave of demand from data centers. The batteries for the project will be made in the company’s factory in West Virginia, he continued, which has begun commercial production and “is on track to reach a production capacity of 500 MW per year by 2028.”
“A new iron age for the grid is upon us!” he quipped.
But that’s not all. Tacked onto the deal is $50 million from Google to support Xcel’s first-of-a-kind distributed capacity procurement program, which was established in October to place 200 MW worth of utility-owned and -operated batteries at strategic locations, like local businesses or commercial and industrial sites, where the grid needs capacity. The theory is that this program, dubbed Capacity*Connect, will improve grid health and avoid the need for costly upgrades.
With the combination of elements that comprise its Pine Island deal, Google has essentially taken a model that it has spent the last 1.5 years proving out in Nevada, and scaled it up in an environment with different incentives, geography, and utility needs. According to a LinkedIn post from Briana Kobor, Google’s head of market innovation, it’s an “example of how data center load can act as a catalyst for electric system change.”
In Minnesota, the refresh of Google’s tariff also comes with a new name; it will be called the “clean energy accelerator charge,” or CEAC, rather than the CTT.
The regulatory backbone
Google’s pitch is to power the project in accordance with the requirements of Minnesota’s aggressive clean electricity standard, which in 2023 mandated that utilities provide 100% carbon-free power by 2040. The Minnesota Commerce Department’s page about the law suggests that the state is bullish on storage in particular: “Minnesota will need to add many hundreds of megawatts of new short and long duration storage projects to help balance the intermittent, low-cost electricity generated from wind and solar,” it reads.
Minnesota has not historically been a center for data center development, but the artificial intelligence boom has created a rapidly growing secondary hub in the state. Prompted by that rush to build in recent years, the state legislature in 2025 passed a bipartisan law to both maintain or extend tax breaks for data centers, while simultaneously establishing new environmental rules. Months before President Trump’s current push to require data centers to cover their own costs, the Minnesota law included very similar ratepayer protection language — which Google has now echoed in this latest agreement.
For now, though, the CEAC deal is in the hands of the regulators. The formal agreement will be filed for review by the Minnesota Public Utilities Commission “in the coming weeks” according to Xcel. In Nevada, it took a little under a year for the PUC to approve the CTT, which got the go-ahead in May of last year.
The MPUC is also currently reviewing Capacity*Connect program — and the discussion underway in the docket has exposed the challenges of getting the first-of-a-kind program off the ground. Everyone from clean energy advocates to state agencies say the practical details don’t measure up to the grid benefits that Xcel has promised.
They argue the program that Google plans to help fund will be slow, expensive, and less effective than traditional VPP programs. One key point of contention is the fact that utilities would own the batteries under the DCP, and therefore they would be capital expenditures borne by ratepayers and subject to a guaranteed rate of return, which would likely cost more than traditional VPPS that rely on customer devices.
The affordability pitch
This comes as the debate over who should pay for the energy demands of data centers heats up nationwide, as does community opposition to new builds. Trump said in January that he would require data centers to pay their own way so that data centers don’t drive up electricity prices.
Then last night he reaffirmed that position in his State of the Union address, announcing a “ratepayer protection pledge” that remains short on details but seems to describe a move that has already been underway; in the last few months Microsoft, OpenAI, and Anthropic have all vowed to “pay their own way.”
That said, both Caroline Golin and Brian Janous, who previously led energy work at Google and Microsoft, respectively, have pointed out that these pledges jibe with how hyperscalers have already been doing business. The slew of announcements are “meaningless,” Janous said in a LinkedIn post this morning. “They are meaningless because data centers have been paying their own way from day one,” he wrote, before laying out how utility rates work. “Trying to stop data center expansion in the name of limiting rate increases will only make the problem worse.”
Google has yet to make an explicit pledge in alignment with the president’s recent moves, but it has certainly mirrored the language as its peers, both in the Xcel deal and elsewhere.
Jennifer Granholm, the former Energy Secretary under the Biden administration, said in a post on LinkedIn about the deal that “this is how data center siting should be done,” applauding everything from Minnesota’s legislation protecting ratepayers from footing the bill for new data centers to what she characterized as $130 million in new tax revenue for Pine Island.
Also on Tuesday, Google announced another major data center power deal, over one thousand miles south. The new project in Wilbarger County will be co-located with new clean power built by AES, which will own and operate the generation. The project’s focus will be water security and — what else? — energy affordability.
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