New study identifies investments of $4.5 billion to $8.3 billion needed in Colorado during next 20 years
by Allen Best
Students of the energy transition have long understood that the final phases are likely to get more difficult and expensive. A study of transmission in Colorado during the next 10 to 20 years gives hard numbers to that challenge.
The study commissioned by the Colorado Electric Transmission Authority finds that Colorado will need investment of between $4.5 billion and $8.3 billion in transmission.
This is on top of the $1.7 billion that Xcel Energy ratepayers will be spending on the 550-mile Colorado Power Pathway now under construction in eastern Colorado and the smaller increments of transmission currently planned by other utilities.
The lower-end figure, $4.5 billion, is the baseline or reference case. The additional $4 billion would be needed if data centers proliferate and fast growth occurs in vehicle and building electrification.
Colorado Electric Transmission Authority, or CETA, was created by state lawmakers in 2021 as an independent, political subdivision of the state. It has broad powers to fill in gaps of Colorado’s electrical transmission network beyond what Xcel and other electrical providers are doing.
This specific study looking out to 2045 was mandated by another law, SB23-016, which was sponsored by Sen. Chris Hansen and Rep. Karen McCormick. The law ordered CETA to conduct a study to analyze the need for expanded transmission capacity in Colorado to meet the state’s forecasted demand for electricity, achieve the state’s emission reduction goals, improve the flow of electricity on the transmission system, and improve reliability of the electric grid.
This is that study. It was conducted by Energy Strategies, a consultant based in Washington D.C., whose representatives reported their key findings to Colorado’s public utility commissioners on Aug. 26.
To the extent that the study will identify the gaps in Colorado’s electrical grid that will cause it to fall short in the decades ahead, it will inform decisions made by the nine-member board that directs CETA about priorities in the months and years ahead.
Maury Galbraith, the executive director of CETA, said in an interview that the wholistic study was intended to identify which needs are being addressed by the individual utilities in their service territories and what gaps lie beyond their plans. And of those gaps, which will be the ones best suited for CETA to address.
That will be the key question in conversations between CETA, the consultants for this study, and Colorado’s electrical utilities after this initial study is posted in mid-September.
Another full-day session is also planned with the PUC commissioners in October as well as a formal presentation to the energy committees in the Colorado House and Senate before the end of January.
This is the sort of stuff that could induce instant yawns if you were to bring it up at half-time of a Broncos game — unless, of course, your companions happened to be people deeply engaged in trying to figure out how Colorado will meet its greenhouse gas reduction goals. Nearly all experts see new transmission being necessary as well as employment of new technology. This study puts numbers on both.
One portfolio modeled in the study sees 44% of the $4.5 billion being used to construct roughly 550 miles of new or greenfield transmission. This same model sees 3,100 miles of existing transmission lines improved through rebuilding and reconductors.
“Much of the state’s transmission needs can be met with the existing system. It just has to be rebuilt and reconductored,” said Keegan Moyer, a principal with Energy Strategies.
“A key strategy for the state, in our view, is capturing the value of that existing right of way,” said Moyer. “That’s a really critical component of the state being able to meet its demand and resource forecasts over the next 20 years.”
Upgrades using newer technology for transmission of electricity alone will be insufficient to keep up with growing demand within Colorado. New lines will also be needed.
In the 20-year period, for example, the report also identified the need for new transmission linking existing lines at Rifle and Poncha Springs.
The study identifies need for a new line from north to south on the Western Slope if new resources are developed there or if Colorado ends up connecting with other out-of-state lines that nick the corner of northwest Colorado.
The study sees more urgent near-term transmission needs. They include the San Luis Valley, northeast Colorado, and southeast areas of Colorado. Denver metro has needs, too, but utilities are currently looking at that, so the consultants spent little time on it.
Those changes will be needed in the next 10 years to facilitate the amount of resource and load forecasted in the electric resource plans of utilities, said Moyer. Needs of the next decade will be exacerbated in the 20-year horizon.
“So there’s significant opportunity for quote-unquote right-sizing transmission in these areas so that the builds can be efficient and accommodate further growth into the future,” Moyer said.
Looking beyond Colorado’s borders
Looking beyond Colorado’s borders, the consultants found “excellent interstate expansion opportunities.” And many will make sense for Colorado investment. “More work needs to be done to find the optimal set of investments in terms of those interstate upgrades,” Moyer said.
For example, there are opportunities to connect the 345-kV transmission lines that were built around the Craig Generation Station to connect to new lines being erected from Wyoming across northwest Colorado to the southwest.
The precise benefits to Colorado, however, will depend upon what happens outside Colorado. This is especially true of new transmission connecting southeastern Colorado with New Mexico. The consultants found the need for upgrades to transmission in New Mexico for Colorado to benefit from new connections.
CETA’s Galbraith points out that work devoted to the efficient movement of electricity is the highest priority.
“You need to do that internal work in order to take full advantage of the inter-regional opportunities. Without the work within Colorado, you are not going to be able to fully leverage those regional market opportunities.”
State law requires Colorado utilities to engage in regional transmission organizations by 2030. Some are moving ahead with ties into the day-ahead market of the Arkansas-based Southwest Power Pool in coming months. The other primary option has been to look west to the California-based CAISO.
The study also examined the costs and benefits of improving transmission across the Western and Eastern interties in Colorado near Lamar and Burlington and near Sydney, Neb. The interties studied would provide one and two-gigawatt capacities at the Lamar (May Valley) intertie and one gigawatt at the others.
In explaining the scope of the study, Moyer specified what the study was not. For example, it was not an electric resource plan for Colorado utilities. That said, the study projected needed generation for Colorado for 15 gigawatts up and above what utilities have targeted in their existing or imminent electric resource plans. Xcel and other utilities are currently planning for roughly 2028 to 2035.
Energy Strategies also emphasized that this is a starting place for more discussions.
“This is A plan, not THE plan,” emphasized Tom Green, a former wildlife mitigation planner for Xcel Energy in Colorado who is now with Energy Strategies.
The PUC commissioners also had questions that generally centered around whether other strategies could be used to minimize need for transmission.
Eric Blank, the chair of the PUC, asked about low-growth scenarios for electrical load. “If we got 1,000 megawatts of virtual power plants with storage in the Denver metro area, what would that do?” he asked.
Energy Strategies’ Moyer answered that it wouldn’t eliminate much load. It might drop to 13 or 14 gigawatts (from the 15 gigawatts in the model).
“There’s no world where one gigawatt of distributed resources displaces 10 gigawatts of utility-scale resources. That’s not how the physics or the math works.”
But rapid growth in localized or distributed resources and demand reduction strategies might displace some of the most expensive transmission.
A concluding thought:
In hearing this report, I was reminded of what Bryan Hannegan has said repeatedly. The chief executive of Holy Cross Energy, Hannegan has said the transition to renewable energy will be achieved with little, if any, costs until 85% to 90% penetration. That last 10% to 15%, he has said on many occasions, will likely be far more costly and difficult.
One concern I am beginning to hear is that rising cost of electricity may soon become an issue. Transmission will pose one of those costs but other technologies that provide the baseline generation need to ensure reliability may also come in with very high price tags.
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Allen, I think what’s missing in the conversation about transmission, is the fact that there are already established corridors across the US. They’re called railroads. And we have to electrify our railroads. The up front cost to do so, is very expensive, but it’s far less expensive to operate an electrified railroad once the infrastructure is built. Building transmission lines on existing railroad right aways, would solve two problems. It would have to be a private/government collaboration. But that’s what needs to get done. Ward