Colorado Springs says it can’t affordably meet 2030 emission targets. Xcel Energy warns about ‘resource adequacy.’ Bumps on Colorado’s path to its decarbonization goals.
by Allen Best
The Ray Nixon Power Plant south of Colorado Springs burns both natural gas and coal, and the coal component was scheduled several years ago to close by 2030. That would have allowed the operator, Colorado Springs Utilities, to meet Colorado’s 2030 emissions reduction goals for the electric sector.
Now, CSU – as the utility is known – has initiated talks with state officials about keeping the coal portion of the Nixon plant open for a few more years.
Colorado Springs closed its aging Martin Drake coal plant in 2021 and replaced it with gas generation. The remaining Nixon plan\t —seen above in the photo of Colorado Springs Utilities — has a capacity of 260 megawatts of generation, of which 46 comes from gas.
Xcel Energy, the state’s largest electrical provider, has also delivered a warning to state regulators that the decarbonization path has hit some bumpy spots.
“Resource adequacy is a paramount concern for PSCo (Public Service Co., Xcel’s subsidiary in Colorado),” said a letter from Alice Jackson, a senior vice president for system strategy & chief planning officer at Xcel.
The letter signed by Jackson and two other corporate officers in the utility’s long-range planning division warns of threats to electrical reliability as utilities across the West add ever-increasing amounts of weather-dependent energy generation.”
Xcel has signaled its wish to add more gas-fired power generation.
An overlapping problem for the two utilities but also others has been the escalating cost of wind, solar and other renewables. Prices have been rising, the result of tangled supply chains as well as transmission constraints and other issues.
Unlike CSU, Xcel has not said it will be unable to reduce its emissions 80% by 2030 as compared to 2005. It has, however, dropped its expectations just a bit. Xcel at one point had said it expected to reduce emissions 86%
Tri-Sate Generation and Transmission Association, the wholesale supplier for 17 electrical cooperatives across Colorado, has said it expects to achieve its 2030 goals. Other electrical providers so far have not reported problems in meeting the goals.
One utility, Holy Cross Energy, was at 80% renewables in January after achieving a high mark of 90% in October.
Holy Cross has 46,000 members, as customers of electrical cooperatives are called. Colorado Springs has 263,000 customers.
Travas Deal, the chief executive of CSU, described the predicament he sees in a Feb. 20 posting on the utility’s website. He reported that average costs for wind projects in the last two years escalated 60% and solar projects rose 50%.
CSU has reached out to Colorado Gov. Jared Polis and his staff as well as other policymakers to see if a compromise can be reached. Steve Berry, a spokesperson for CSU, says the utility is talking about different “pathways.”
“We can’t pursue these expensive power-purchase agreements,” he explained in an interview. “It’s just not possible. It wasn’t just cost, although cost was a big factor. It was also timelines and transmission capacity.”
The transmission lines needed to deliver electricity from renewable sources have become congested, he said.
CSU has not projected the emissions it expects to a have reduced by 2030 compared to 2005 levels. That will depend upon what agreement can be reached with state officials.
Colorado Springs, Berry emphasized, does not disagree with the goal of the emission reduction adopted by state legislators in 2019. “I think they want from their perspective what is best for the state, and I think it’s really a question for us as a municipal utility as to the timing and the amount of money we would saddle our customers with. That and reliability.”
Deal said that CSU in February 2023 issued a request for proposals asking for bids for 1,500 megawatts of new electric generation and up to 200 megawatts of battery energy storage.
The utility has received more than 200 proposals for power purchase agreements, or PPAs. “Many of the PPA prices are at least 60% higher than expected for wind and 50% higher for solar.”
He attributed the higher prices to several factors:
- a congested supply chain;
- high demand;
- raw material scarcity; and
- potential tariffs and policy changes proposed by the Trump administration.
“Although these proposed tariffs and policy changes have yet to have full effect, vendors have preemptively included the anticipated increase in their pricing models,” he wrote.
“These factors have not only increased renewable energy project prices, but they have also pushed out project completion timelines, with some completion dates several years into the future,” he wrote.
Deal also said cited limited transmission line capacity as a significant cost in delivering power from the renewable new projects to the electric grid in Colorado Springs.
He said Colorado Springs Utilities is exploring energy resources and transmission partnership with other utilities. “But those will take time to develop.”
In an interview with the Colorado Springs Gazette, which first reported the news about the local utility, Deal said he has given state officials “a lot of options, and a la carte of options, for alternative timelines or approaches. He said he hoped to receive some direction from the office of Colorado Gov. Jared Polis about what the alternative approaches to renewable energy goals would look like.
“We want a preferred direction from them, so we know what our purviews and our parameters are, what they would be comfortable with and what they would not be comfortable with,” said CSU’s Berry.
Ari Rosenblum, the spokesperson for the Colorado Energy Office, said Colorado utilities “are on track to collectively exceed an 80% reduction in emissions from electricity generation by 2030.”
As for Xcel Energy, it filed its letter with the state’s PUC in February. “We wrote to express our concerns about the continued skepticism around the level of resources we have identified as necessary to maintain the reliability of the current system and address the growing demand in Colorado,” said the letter.
Similarly, we are concerned about the pace of our existing regulatory processes and how that intersects with the reality of meeting customer and system needs.”
After about 20 years of modest growth in demand caused in large part by Colorado’s growing population, Xcel in the last 18 months has begun projecting large – even massive – increases, a majority of that from the needs of new data centers.
Xcel’s letter to the three PUC commissioners said the electric system is losing firm generation that is available 24 hours per day, 7 days per week. “And we must take actions to secure replacement for the retiring generation over the medium- and long-term. Short-term actions and patches are not solutions for the long run.”
“In recent summers, PSCO has been looking to the market for firm energy purchases and solutions. This is not an option we can continue to rely on as western power markets get tighter and other energy providers experience the same demand growth we are forecasting in the PSCo territory.
Xcel said that for the period from 2018 through 2022, approximately 75% of the proposed resources additions came on -in in the year scheduled. In 2023, though, only 53% of the scheduled resources actually went online. “The rest were delayed or cancelled.”
In a later filing with the PUC, Xcel asked for delayed deadlines of a few weeks for executing contacts for resources approved in the 2021 Electric Resource Plan.
Also: Joining the SPP RTO
Despite the supply chain and other issues, CSU sees benefits accruing quickly after it and several other Colorado utilities join the South Power Pool regional transmission organization in 2026. The RTO will allow sharing of transmission and energy.
“This expansion will occur at a much faster pace and lower cost than if we were to secure these resources ourselves,” he said.
Tri-State Generation and Transmission and United Power are also scheduled to join the Southwest Power Pool RTO in 2026. Xcel Energy has agreed to join a more limited day-ahead market.
And: Supports the nuclear bill
Deal on Tuesday testified before the Colorado Senate Energy and Environment Committee in support of HB25-1177, which would classify nuclear energy as clean energy and hence a source that could be used to meet Colorado’s emission reduction goals.
Existing nuclear energy is very costly, although advocates hope that the costs can be dramatically lowered once new engineering gets tested and new designs can be manufactured at scale.
We do think that the door should not be shut yet,” said Berry.
Both Xcel and Tri-State, in either filings or in public presentations, have said they don’t see nuclear being an option for at least another decade.
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- K.C. Becker taking helm of COSSA - March 18, 2025
- Troubles among Colorado utilities - March 12, 2025
- Lines across eastern Colorado - March 12, 2025
Classifying nuclear energy as clean energy by passing HB-25-1177 does not make it so. It’s political self-deception. Nuclear energy is not clean or even green. Nuclear energy produces hazardous waste, specifically radioactive waste that comes from fissioning reactors burning uranium fuel even without flame or smoke. Nuclear waste requires careful management and disposal due to its potential for long-term harm to human health and the environment. Nuclear waste remains highly radioactive for thousands of years. The Yucca Mountain Nuclear Repository in Nevada was designated to store this waste but the people of Nevada are refusing to take anymore. Classifying nuclear energy as clean energy is delusionary.
Nuclear is the long term solution to clean, reliable energy that does not require Billions in additional costs from tens of thousands of miles of extra transmission that intermittent low capacity factor resources like wind and solar require. The big issue is re-opening Yucca Mountain or finding a place to safely store and dispose of the spend nuclear fuel like France does.
As they say in the wind biz, “Targets ain’t turbines.” There are a lot of moving parts here. The PUC seems overwhelmed, and the state via the governor and Energy Office, and now the leg seem distracted by geo, CCS, H2, and nuke “weapons of mass distraction.” A few thoughts:
Co-ordinate purchase and installation of wind turbines/farms statewide so the “supply chain” of manufacturers and contractors don’t look out and see yearly orders of 0 turbines, 0 turbines, 500 turbines, 30 turbines, 800 turbines, 50 turbines… There appears to be plenty of, even some almost idle, manufacturing capacity for onshore wind components. It would like to have some certainty, same with the contractors who need to mobilize labor, transportation, special cranes, etc. in addition to just ordering components.
Get to the bottom of solar farm costs: Solar panel prices are very low now, though yanked around by tariffs and bans, even pre-#47. How much of price increases are due to risks or extra costs imposed by county permitting, onerous interconnection, etc. leading to interest rate premiums.
Immediately, re-visit coal plant modifications for faster cycling, ramping, whatever, with battery integration at the plants. (I think one reason for the transmission “bottleneck” at Pueblo is that the unit(s) can’t stop or ramp down enough to allow renewable power through.)
In the mid-long term, it’s fine to utilize gas turbines and allow 10-15% fossil generation, and instead concentrate on heat pumps, heat storage and EVs, instead of worrying about how or what to use for the last 15%. There is another “hockey stick” and it shows that with generally cheap renewables and a reasonable amount of energy storage, marginal $/kWh escalates quickly beyond 85% or so for more zero-emission power.
As far as I know, there are no world-wide shortages of “raw materials,” for any of this. The USA and American business community may have created some shortages here of our own volition. (rare earth magnets, transformers…)
Actually quickly deploy the known enhancements to add capacity to existing transmission.
Give us rates which allow us to soak up excess renewables inexpensively (hot water heaters, other heat storage, EVs…) when they are over-produced to avoid curtailment. Work with the REAs on the plains to get these rates to them from nearby solar or wind projects, which would also help reduce the local friction.