Inside Minnesota’s clean energy revolution

Amid rising global temperatures, many businesses and governments around the world have pledged to drastically cut back on greenhouse gas emissions in the decades ahead. Minnesota legislators, for example, have mandated that all electric utilities provide exclusively carbon-free energy by 2040.

What’s less clear is how exactly any of these entities will make good on their promises. Fossil fuels remain entrenched in many aspects of modern life; entire systems have been constructed to keep carbon-burning energy sources in place. Switching from fossil fuels—the leading contributor to climate change—to “cleaner” sources of energy is an existential matter for the human race, according to the vast majority of climate scientists. But the shift remains a tall order and will necessarily involve new ways of thinking and doing business.

“We know we need innovative solutions that don’t exist today,” says Gregg Mast, executive director of Clean Energy Economy Minnesota (CEEM), a Minneapolis-based nonprofit whose mission is to “promote the business case for energy efficiency and clean energy.”

That’s why Mast and others describe the clean energy sector as essentially a “startup industry.” A public-private partnership now seeks to position Minnesota as an early leader in the space. Known as Minnesota Energy Alley, it formally launched this past spring, an effort that aims to replicate the Medical Alley model for the energy industry. New business formation is a key part of the effort; one of its biggest priorities is providing funding for startups through the Grid Catalyst accelerator program.

Leaders behind the Energy Alley initiative argue that startups are essential because they can move more quickly and nimbly than existing industry titans. Utility providers, in some cases, “aren’t as agile, so they look to the startup community and entrepreneurs to help bring new ideas to market,” Mast says.

Grid Catalyst, which advises and mentors early-stage companies, has been around since 2021, but its latest iteration has a notable change: an infusion of dollars from the Minnesota Legislature. In the 2023 session, lawmakers set aside $3 million in total for the Minnesota Energy Alley initiative; of that, about $1.8 million will go toward funding cohort members’ demonstration projects in the Grid Catalyst program. Nina Axelson, Grid Catalyst’s president and founder, says that about $850,000 has been set aside for seed investments in the 2024 cycle.

Axelson says that one of Grid Catalyst’s biggest draws for founders is an opportunity to stage large-scale demonstrations of their clean energy technologies with industry partners. As she sees it, many energy startups tend to get stuck in a sort of catch-22: They have big ideas and projects in mind, but they don’t have the money or the scale to even test them out. Axelson calls it “the commercialization valley of death.”

Grid Catalyst solves that dilemma by providing funding and access to industry partners willing to help, including titans like Xcel Energy and 3M. Startups in the program don’t have to be based in Minnesota, but they do need to demo their project with a Minnesota-based partner. (In fact, of the six companies in the 2024 cohort, just two are based in Minnesota. One, Minneapolis-based Aza Power Systems, is developing a carbon-free, ammonia-powered engine.)

For Axelson, it’s important to show that a clean energy project can work in Minnesota’s climate, which presents its own unique issues. It’s one reason she believes the state is well-positioned to lead on clean energy: If a piece of tech works in Minnesota’s frigid winters, it certainly can work in more moderate climes, the argument goes.

“Folks from other parts of the country trying to bring ideas to Minnesota often underestimate the actual weather and climate challenges specific to the Upper Midwest,” she says. “It’s great to have innovation from other places come here, but you have to have an adaptation plan.”

Wherefore State Money?

A classic libertarian critique would argue that the state has no business investing in experimental and unproven technologies. Lawmakers behind the bill funding the Minnesota Energy Alley maintain that the “public” part of the larger public-private partnership is a small piece of the puzzle. The larger aim, they say, is to help clean energy startups move past common early-stage issues that can derail innovative tech and, eventually, to bring in private-sector investors to the space.

“We’re not funding a business beginning to end,” says Rep. Larry Kraft (DFL-St. Louis Park), lead author of the Minnesota Energy Alley initiative funding in the House. “In this area, where there’s a bunch of promising technologies, we want to help some get over the hump. … In all these cases, in the ratio of government money to private money, the private money is going to be substantially higher.”

Axelson sees the Grid Catalyst program as a way of attracting future capital to the clean energy sector in Minnesota. “If we can attract businesses here and grow them here, we hope we can become a really obvious choice for capital that comes from the coasts or [for] more regional capital,” she says.

The concentration of capital and investors on the coasts is not, of course, a problem unique to the energy sector in Minnesota; local startups have long had to contend with investors who’d rather see them build businesses in other places with existing investors and startup infrastructure in place. “We’ve had companies that have been told by California investors, ‘We’ll invest in you if you don’t stay in Minnesota.’ I’m going to do everything in my power to make sure that is not where we go from here,” Axelson says.

Sen. Nick Frentz (DFL-North Mankato), who worked on the Energy Alley funding bill’s companion in the Senate, says that the clean energy sector is ultimately an economic development issue, “whether we believe in it or not.” On the clean energy front, there is plenty of federal funding on the table for states; even several red-leaning states have already taken advantage of it, in some cases even more than Minnesota.

“Minnesota is behind some states in terms of competitiveness” in the area, Frentz says.

Growing Pains

Capital concerns aside, there is inherent risk in adopting new and sometimes experimental technologies. Certainly, some technologies and the companies behind them can fail, which makes some potential investors and customers anxious. As Axelson puts it, “A lot of folks don’t want to be first adopters; they want to be third. It’s the most comfortable position to be in.”

She sees her role as helping other leaders weigh perceived risks versus actual risks.

Still, it bears noting that fraud can and does happen in a nascent industry like clean energy.

The residential solar industry, in particular, seems especially prone to bad actors, as a swarm of companies swoop in to take advantage of well-intentioned homeowners.

In August, National Public Radio documented high-profile cases of individuals saddled with high debt for solar panels installed on their homes, some of whom said they were misled. In Minnesota, the case of outdated wind turbines left abandoned in the small town of Grand Meadow serves as a conspicuous reminder of the potential risks of new tech. After two recycling startups promised and failed to recycle the turbines, piles remain and, as of mid-September, are still visible on Google Earth’s satellite view .

Clean energy advocates are well aware of anecdotes like these, but they maintain that they’re just part of the “growing pains” of a maturing industry. “The clean energy economy has experienced some fits and starts, and some investments haven’t panned out,” says Jessica Hellmann, professor and executive director of the Institute on the Environment at the University of Minnesota. “Some of that has to do with the stability of policy.”

European countries are years ahead of the United States in nurturing and adopting clean energy innovations, she says. “There have been a number of boom and busts, in part because the market hasn’t matured. The policy environment is still maturing, too. There’s a little bit more stability in Europe, with more consistent policies.”

Mast with Clean Energy Economy Minnesota says his organization has a “very strong vetting process” to help avoid potential debacles.

As he and others see it, the move toward carbon-free energy is inevitable, hiccups or not. A report by CEEM showed that more than half of Minnesota’s energy last year is already being generated by carbon-free sources. “Energy touches our lives in every possible way,” Mast says. “Clean tech is now main tech.”

Meet the Minnesotans Leading the Clean Energy Transition

Headlines about climate change can be downright depressing. But several smart people are working hard to fix it, and many of them are in our own backyard. Here are a few standouts in the clean energy industry.

Sean Jarvie, Flow Environmental Systems
Title: Chief technology officer, co-founder
HQ: Rogers

What the company does: The company sells carbon dioxide refrigerant heat pump systems. Many modern HVAC systems are powered with synthetic refrigerants that are toxic if they leak. Those systems can also pump more greenhouse gases into the atmosphere. Flow Environmental’s systems are instead powered by carbon dioxide and, Jarvie says, produce no net emissions from the gas. As he puts it, it’s a matter of “making the problem into the solution.”

Why he’s motivated to work in clean energy: “The thing that’s driven me most of my career is the fact that it’s one of a few industries where you can make a huge difference, and you can make it with a small group of people.”

Jeff Kiesel, Restaurant Technologies Inc.
Title: Chairman, CEO, and president
HQ: Mendota Heights

What the company does: Founded more than two decades ago, Restaurant Technologies provides a range of services for the restaurant industry. In addition to automating various back-of-house functions, the company also recycles used cooking oil from restaurants for use as biofuel. Kiesel estimates that Restaurant Technologies is the second-largest collector of used cooking oil in the U.S.; last year, the company converted over 314 million pounds of used cooking oil into renewable diesel or biodiesel.

Why he’s motivated to work on clean energy: “This is a circular business. I think of us more as a service business, with the great benefit that we are having a positive impact on the environment.”

Andrew Jones, Carba
Title: CEO and co-founder
HQ: Minneapolis

What the company does: Carba has developed a method of converting biomass waste into a charcoal-like substance designed to sequester carbon underground indefinitely. The company sources biomass waste from things like wood waste and yard waste. “There’s a huge excess of biomass waste in the Twin Cities, in part because of emerald ash borer disease,” explains Jones. Carba can then sell carbon offset credits for specific quantities of carbon trapped; essentially, other companies can buy credits from Carba to offset emissions they’re producing elsewhere. Jones says that many of the biggest buyers of credits these days are big tech companies, banks, and pharmaceutical firms. Carba took the top prize in the annual MN Cup entrepreneurial competition last year and has continued to grow since then. The startup, which employs fewer than 10 people today, is actively fundraising to grow its operations, Jones says.

Why he’s motivated to work on clean energy: “Two things: One was seeing how dire the situation was getting with the climate and not enough being done. The second was that companies were starting to pay for carbon removal. It was clear that carbon removal was an essential part of mitigating the worst effects of climate change.”

Reed Richerson, US Solar Corp.
Title: President
HQ: Minneapolis

What the company does: US Solar Corp. is a developer, owner, operator, and financier of solar projects across the nation. Richerson says it’s unique in the industry for a solar company to do all of the above, since many solar projects can often pass from developer to developer over their lifetime. The company, which has not raised any external capital during its nearly 10 years
in existence, sells solar energy to both individuals and businesses. “We’ve had slow, methodical growth,” Richerson says.

Motivation to work in clean energy: “I was drawn to clean energy as a youngster. Now, quite frankly, we have no other choice. We have to get to 100% clean energy as a species.”

Benjamin Gerber, Midwest Renewable Energy Tracking System (M-RETS)
Title: President and CEO
HQ: Minneapolis

What the company does: M-RETS has developed a tracking system for renewable energy generation and compliance across North America. The company issues certificates for each megawatt-hour of renewable energy generated. “We act as a source of truth” for the energy industry, says Gerber, who previously oversaw energy policy at the Minnesota Chamber of Commerce.

Why he thinks Minnesota is poised to lead on clean energy: “Having something like Minnesota Energy Alley in place is a beacon to the rest of the country that Minnesota has an ecosystem that fosters the growth and success of emerging and even mature clean tech businesses.”

Nina Axelson, Grid Catalyst
Title: President and founder
HQ: Minneapolis

What the organization does: Launched in 2021, Grid Catalyst runs an annual business accelerator program that gives clean energy startups a chance to stage large-scale demonstrations with industry partners. Axelson says it’s a way for energy startups to move past the “commercialization valley of death.” It also helps to put Minnesota on the map nationally, she says. Axelson says interest is growing in Grid Catalyst, having logged a 100% increase in applications for its 2025 cohort.

Why she’s motivated to work on clean energy: “It’s so easy to get caught up in a version of the [climate change] story that is gloom and doom. But I have such a deeply held belief in innovation and people’s potential. Getting to interact with startups in this community is good for the soul. It’s inspiring across the board.”

Seamus Kane, Aza Power
Title: Co-founder and CEO
HQ: Minneapolis

What the company does: This startup is developing ammonia-powered, CO2-free engines for generators, heavy vehicles, and thermal systems. “We’re doing repowers and retrofits of fossil-fuel-burning equipment,” says Kane, who has a Ph.D. in mechanical engineering from the University of Minnesota. That category could include engines, but also things like boilers and gas turbines. “We’re basically taking equipment and modifying it so it runs on anhydrous ammonia,” which can be produced through cleaner energy sources like wind, solar, and nuclear power, according to Kane. The company’s products aren’t commercially available yet, but it has a couple prototypes in the works, Kane says.

Why he’s motivated to work on clean energy: “Being on the academic side, I see a lot of hope and a lot of interesting, novel ways that we can fight and reverse climate change. There are smart people working on this right now, and there are technologies out there in labs right now that are going to turn this thing around for us.”

Peter Frosch, Sustainable Aviation Fuel (SAF) Hub
Title: CEO, Greater MSP Partnership
HQ: Minneapolis

What the organization does: The hub, a partnership of several industry players, is working to develop sustainable aviation fuels from organic materials like feedstocks, agricultural biomass, woody biomass, and used cooking oils. In September, Greater MSP announced that Minnesota’s first sustainable aviation fuel blending facility in Rosemount is slated to be completed by 2025’s end. Koch Industries-owned Flint Hills Resources is building the facility with the help of Delta Air Lines and a few other big-name players, including Bank of America and Shell.

Why he thinks Minnesota is positioned to lead on clean energy: “We have companies that have been on the leading edge of the agricultural space for a century. They’re seeing important parts of the future of their business in the clean energy transition.”

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