Get Big Pivots


A lot of money, of course, and a lot of new transmission in and around metropolitan Denver. What else is there in this package?


by Allen Best

What an exciting time for Colorado.

We’re reinventing energy at a brisk pace that puts us in the front tier of states engaged — and also guiding — this necessary and critical transition.

And now we have specifics of what our largest electrical utility, Xcel Energy, with 1.6 million customers, prefers to do in meeting expanding demands for electricity while complying with a raft of state laws adopted beginning in 2019.

“This plan is transformational,” says Xcel in its filing from Monday night with the Colorado Public Utilities Commission. Yep.

You can download the report, “Our Energy Future: Destination 2030” Or go to the PUC e-files in proceeding 21A-0141E and look for Public 2021 ERP & DCEP.. There are several dozen related documents in the docket.

You’ve probably read the about this in the Denver Post or elsewhere. Lots of statistics. The most important one in 184 pages of statistics is this:

Xcel expects to be at 80% to 85% emissions-free energy by 2030. That not just a reduction as compared to 2005 levels. The law adopted in 2019 required it to achieve 80% reduction. This plan, if adopted and executed, goes higher. This is more than reduction. It goes roughly 10% higher.

The company says it can deliver this with a rate impact of about 2.25% annually. This compares with the projected rate of inflation of 2.3% during the remainder of the 2020s.

Too much? Well, Xcel does look out after its own financial interests. Robert Kenney, the president of Xcel’s Colorado division, made the case for reward for capital invested in an exchange Tuesday night with self-appointed and dedicated Xcel watchdog Leslie Glustrom at Empower Hour.

“I do believe we have seen the investor-owned utilities (around the country) spur innovation for nascent technologies into maturity,” said Kenney, who before his arrival in Colorado in June 2022 spent seven years with PG&E in California and, before that, as a PUC commissioner in Missouri for six years.

(See that exchange here; it’s early in the 90-minute program).

Xcel is moving boldly with the $14 billion in energy investments identified in this plan, but it may not even be the most impressive feat in Colorado. Holy Cross still says it expects to be at 100% emissions-free energy by 2030. And Tri-State, too long the epitome of a drag-your-feet G&T, is not terribly far behind — if it can keep its members. But that’s another story.

Cheyenne Ridge wind farm Oct. 3,2021

Xcel was reluctant to go forward with its first major wind farm, completed in 2004, but now has much wind — and will add far more in the next few yeas. Photo near Cheyenne Wells, Allen Best

Keep in mind, this is not just fuel switching. It’s also fuel expansion. We will need double or triple the electricity as we electrify buildings and transportation. We’ve barely begun.

This is on top of population expansion within metro Denver, the primary market for Xcel Energy. Xcel projects increased demand (called load, in the terminology of electrical providers) at 300 megawatts by 2026.

Xcel’s report notes that the population growth in the Denver metro area has consistently outpaced the national rate in every decade since the 1930s.

That said, much in Xcel’s preferred plan was unsurprising. It lays out a broad program for 6,545 megawatts of new renewable projects, broken down in this way:

  • 3,400 megawatts for wind;
  • 1,100 megawatts of solar;
  • 1,400 megawatts of solar combined with storage;
  • 19 megawatts of biomass (forest trees at a plant in Hayden);
  • 600 megawatts of standalone storage.

And to think, aside from the 340-megawatt Cabin Creek pumped-storage hydro at Georgetown, Colorado’s largest battery storage facility last winter was still only 5 megawatt-hours (at the Holy Cross project between Glenwood Springs and Basalt).

This year, Xcel has added 225 megawatts of battery storage to Front Range locations. That was the result of a 2016 resource plan. These things do take time.

Xcel said it proposes six times more storage as compared to its contemplation earlier in this process — a result directly of incentives provided by the Inflation Reduction Act of 2022.

That federal package also delivers other benefits. It will, says Xcel, bring “billions of dollars in federal support to Colorado.” It estimates $10 billion in IRA benefits to customers.


Big investment in transmission

Transmission figures prominently in this plan.

PUC commissioners last fall approved the Power Pathway Project, a $1.7 billion string of high-voltage transmission lines looping 560 miles from near the Pawnee power plant at Brush and around the eastern plains and back to the Front Range. Construction began in June.

Xcel says its “existing transmission system is capable of reliably serving our customers today, but the energy transition cannot be accomplished with only minor changes to the transmission system.”

This plan proposes an additional $2.82 billion in transmission investments.

Part of that is the May Valley-Longhorn extension from the May Valley substation north of Lamar to Baca County, in the state’s southeastern corner. The 50-mile extension, called Longhorn — as most everything is called in the Springfield area — would cost $252 million. It figures prominently in Xcel’s plans because, as this report explains, Xcel finds the wind to be of low cost and its characteristics complementary to wind in other locations.

“Wind generation in the southeast portion of Colorado exhibits materially different generation patterns and will thus be a useful improvement to our system in adding geographic diversity to our overall renewable generation portfolio.”

Or, to paraphrase what I heard from locals in a visit there last week: the wind always blows in Baca County. They can describe the different winds with the expertise that a wine connoisseur might apply to various vintages.

Xcel says the Longhorn transmission extension will deliver 1,206 megawatts of wind. It also says that this wind will save the company – and hence consumers – a great deal of money: $282 million.

That deserves a wow!

However, if that Baca County wind were excluded, there would be more solar and storage.

The San Luis Valley also stands to get transmission upgrades. Appendix Q in the filings says this:

“The area has rough, remote, and challenging geography and weather, significant permitting issues due to a patch work of state and federal land use designations (conservation easements, U.S. Forest Service-managed land, National Park Service managed lands, and multiple state-protected areas).”

Electrical deliveries arrive almost entirely via three transmission lines crossing Poncha Pass. The valley residents are served by both Xcel and by Tri-State members. Both utilities have tried to create solutions since a 1998 study identified the problems. Some Band-Aids have helped.

Xcel proposes to spend $176 million to improve the situation in the San Luis Valley. Additional transmission would also open the door to development of new solar.

Most surprising to me — likely because I do not read the filings on the PUC dockets religiously – is how much Xcel believes it needs to spend in metro Denver: $2.146 billion.

It justifies the expense with this explanation.

“The company’s analysis shows that a new phase of the transition is emerging – reliably managing power transmission within and around the metropolitan area,” says the report. (Page 33).

“Delivery of remote resources is still an important consideration of transmission planning, as evidenced by the critical role that the CPP (Colorado Power Pathway) plays in enabling the preferred plan. However, as the company moves toward a grid powered primarily by renewable resources, and less reliant on legacy urban power plants, transmission investments are increasingly focused on enhancing the capacity and resiliency of the entire transmission grid —including those parts of the grid located closest to our customers’ homes and businesses.”

Why so much money for transmission upgrades in metro Denver? In part, says Xcel, it’s because of the lack of bids for resources within the metro area. The report and an accompanying appendix do not discuss reasons why the company failed to get those close-in resources.

That takes us to natural gas —and the related issue of how well Xcel can meet peak demands caused by extreme weather. The environmental community has been insistent that Xcel needs to reduce or eliminate its investment in natural gas generation. Xcel has maintained that natural gas must remain part of the equation, at least in this planning period, because alternatives have not yet been firmed up.

The company proposes to have 628 megawatts of capacity. This, it says, will solve the “reliability and resiliency variables” of a hot period in the summer of 2028.

In short, Xcel has to prepare for hot summers and cold winters. The base case is a hot spell in July 2022 and Winter Storm Uri of 2021. At both times, renewables underperformed. (I might have thought reference cases to a much hotter time of the future would have been used, but maybe I’m missing something).

What enables Xcel to meet the peak demands for cooling or heating? It could add on even more proven storage, altogether 3,700 megawatts worth, and over 13,000 megawatts of renewables, but at a cost of $5.4 billion more than this plan.

Instead, Xcel sees natural gas being the answer. The company emphasizes modeling that shows the new 400 megawatts of natural gas-created electricity will be needed only 5% of the time. Most of the time, they will sit idle. But, when needed, some can ramp up in a matter of 2 to 10 minutes, others as long as 30 minutes. This compares with coal plants, which mostly took 18 hours to ramp up.

Xcel is proposing a reserve margin of 18%. That’s how much capacity it plans on top of what it thinks it needs. All utilities have some reserve margins.


Game changers in next few years?

Storage is a major component of this part of this Xcel pivot and energy transition story altogether.

“The availability of cost-competitive utility-scale storage is reducing, but not eliminating, the need for new carbon emitting capacity resources – namely in inclement weather and during long-duration high-load situations,” says Xcel.

Will we get a break-through that will change the narrative?

Xcel plans a demonstration project at Pueblo that it expects to get underway in late 2024 to test the efficacy of a new storage technology called iron-rust that the developers believe can store energy for up to 100 hours. Along with its partner, Form Energy, it received a $20 million grant in April from the Breakthrough Energy Catalyst. This week, Xcel announced a grant of up to $70 million from the U.S. Department of Energy. Both grants are to be split between the Pueblo project and a parallel project in Minnesota.

If this proves out, does this change the ball game, largely eliminating the need for natural gas?

Xcel nods at this question, pointing to modeling results that “Highlighting the need for further advancements in technology and a more diverse portfolio of resources may be needed to help economically reach our clean energy goals in the future.”

It also talks about using fuels other than natural gas – think hydrogen and ammonia and biogas —in these plans.

This natural gas component will be the most hotly disputed element of the Xcel plan—as it has been for the last two years.

Also raising my eyebrows in this 120-day report:


New technologies

A recent Colorado law sought to nudge utilities into accelerating new technology. The rule-making by the PUC in regard to this Section 123 provision specified that the resources must be “new, innovative, and not commercialized technology, and provide unique, scalable and beneficiation attributes as to future costs, emissions, reduction, or reliability benefits.” “Wind, solar or lithium-ion based battery storage,” concluded the PUC, do not qualify.

Xcel solicited bids and got a variety of proposals, including:

  • a plant in the San Luis Valley that could burn a variety of clean fuels including hydrogen and ammonia;
  • a hydrogen fuel cell project near Brush that would use salt-storage caverns to deliver 10-hour storage;
  • a 5-megawatt geothermal power plant in Weld County that would mine the 135 degree C (275 degrees F) non-potable water found deep underground.

Xcel found all of these proposals from bidders wanting for one reason or another. However, that’s not a solid no in all the cases, the company added.

Hayden Generating Station

Xcel Energy proposes a small biomass at Hayden, site of the current Hayden Generating Station. It says skill sets can transition relatively easily. Photo/Allen Best

Biomass at Hayden

The company proposes a 19-megawatt biomass plant at Hayden, burning dead trees from northwest Colorado to produce electricity. Colorado has an existing biomass plant at Gypsum, which is a little smaller, 11.5 megawatts, in capacity. It burns wood from as far away as the Blue River Valley between Silverthorne and Kremmling.


Workforce transition

The company points out that it has closed 18 generating units across its service territory during the last 15 years without any forced workforce reductions.

It says it will leverage natural attrition and worker retirements, and the remaining workers will be “up-skilled to operate and maintain the new clean energy assets or, if they choose, relocated and or transited and reskilled into another job.”

For example, it says, workers at the Hayden coal-burning plant have 80% of the skills, on average, needed to operate and maintain a biomass unit. The company says it will work with the biomass unit vendor, Colorado Northwestern Community College, and others to identify the additional training needed.


Pueblo solicitation

As part of its plans for Pueblo, where the Comanche 3 coal-burning plant is scheduled for retirement by 2031, Xcel plans to solicit bids that will fill out what the company needs in that final segment of 2028-2030.

The projects need to help out Pueblo County economically, even though Xcel has already committed to paying taxes on Comanche 3 in lieu of its operation until 2040.

Will it be nuclear? Xcel has not ruled out nuclear, but neither does it see nuclear as an option for 2030.

Xcel Energy Colorado’s CEO Kenney, in his remarks at Empower Hour, said the company sees small modular reactors and related technology under development as having promise.” But, he added, “It is unlikely such technologies will be trued up on a timeline to replace Comanche 3. But it will absolutely be a technology that we will continue to explore.”


Social cost of carbon

The planning considerations for this are so much more complex than those of the past. Decisions must be filtered through the social cost of carbon and also the social cost of methane. There are considerations about disproportionately impacted communities. And, as noted above, we have “just transition” as a consideration.


The simile of a triathlon race

Such documents are not ordinarily noted for their literary flourishes, and this one is no exception. But it must be noticed that aa simile found on page 62 is worth calling out:

“Getting to this point is like training to get to the starting line of a triathlon. We are excited, we have a support team at the ready, we understand the challenges, and we are looking forward to taking them on with a good plan in place. But that does not mean that implementation and execution of the plan will be easy, and unknown challenges lie ahead given the breadth of generation and transmission development contemplated by this plan.”


This story was amended to correct several typos that provided misleading numbers, to wit the date of the Inflation Reduction Act (2022, not a century earlier), plus the size of the grants received by Xcel Energy for the work on iron-rust battery technology in Pueblo and in Minnesota. 

Allen Best
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