Xcel Energy Eyes $2.5 Billion in Colorado Power Projects

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Xcel Energy Incorporated (NASDAQ:XEL) (Minneapolis, Minnesota) wants to invest $2.5 billion to build power projects in Colorado, including about 1,100 megawatts (MW) of wind power, approximately 750 MW of solar power, roughly 380 MW of gas-fired generation and about 275 MW of battery electricity storage, the company said in a June 6 filing with Colorado utility regulators. Xcel Energy also wants to retire 650 MW of coal-fired generation in the Centennial State, at units 1 and 2 of the Comanche Power Station in Pueblo. The utility has no plans to change the status of its Comanche Unit 3, a 750-MW generator that began operating in 2010.

Xcel Energy claims its plan could save Colorado customers as much as $215 million compared to alternate resource plans. If approved by the Colorado Public Utilities Commission, the plan could cut the utility's Colorado carbon dioxide (CO2) emissions in half and raise the percentage of in-state electricity generated by renewables to 55% by 2026, it estimated.

"Our recommended plan secures long-term and low-cost renewable power, stimulates economic development in rural Colorado and substantially reduces greenhouse gas emissions--all at a savings to customers," Alice Jackson, president of Xcel Energy - Colorado, said in a statement. "It's a solid plan that moves Colorado forward."

Last year, the Colorado utility received hundreds of responses to its 2016 electric resource plan, according to a report in The Denver Post. The bids for renewables were reportedly the lowest received to that date by a utility anywhere in the U.S. Several renewable energy bids that included battery storage still came in at less than the cost to generate electricity from coal.

Xcel Energy's Colorado unit already is spending about $1 billion to add 600 MW of wind at its Rush Creek windfarm, which is under construction. The energy plan filed June 6 does not count Rush Creek. Construction of that project began in early 2017. Both 300-MW phases of the project are scheduled to begin generating electricity near the end of this year.

Though some details are unknown, Pueblo County, which hosts the Comanche coal-fired plant, is scheduled to host about 525 MW of solar power at three sites. Two of those sites also will have battery storage units.

The company's Colorado energy plan was praised by the Sierra Club's Beyond Coal campaign. "Xcel's Colorado Energy Plan is a true testament to how fast the cost of clean energy is dropping," said Zach Pierce, a senior campaign strategist. "This plan makes clear that we can power our communities with reliable, affordable and clean power made in Colorado for Colorado."

If approved by the Colorado Public Utilities Commission (CPUC) (Denver, Colorado), Xcel's energy plan would reduce the share of electricity generated to 24% by 2026, down from 44% last year. Only 23% of electricity would come from gas-fired generation in 2026, down from 28% in 2017. Wind would generate 39% of the utility's electricity, up from 23% last year while solar would generate about 13% of the utility's electricity in 2026, up from 3% in 2017.

Xcel Energy, which operates in eight states ranging from Minnesota through Colorado to Texas, is investing billions of dollars to build renewable energy projects across its geographic footprint. In its corporate responsibility report, released in late May, the company said it was on track to reach or exceed its goal of cutting system-wide CO2 emissions by 60% from 2005 emission levels by 2030. Through yearend 2017, the utility holding company had reduced CO2 emissions 35%. By 2022, the company is aiming to have an energy mix that is 60% carbon free. The company has retired a number of coal-fired generators in recent years.

Outside Colorado, Xcel Energy is developing the following renewable projects:

• Crowned Ridge Wind Project, a 600-MW, $1 billion project slated to kick off construction in South Dakota in mid-2019. The plant is scheduled to begin generating electricity by yearend 2021.
• Sagamore Wind Project, an $865 million, 522-MW windfarm in New Mexico that also is scheduled to begin turning dirt in mid-2019. A mid-2020 operation date is expected.
• Foxtail Windfarm, a 155-MW, $270 million wind project, is expected to break ground this summer and be operating by late-2019. This project is located in North Dakota.

For more on Xcel Energy's deepening commitment to renewable generation across its eight-state system, see February 8, 2018, article - Xcel Energy to Retire Coal Plants Early as Wind Buildout Continues, January 24, 2018, article - Greener and Greener: Xcel Energy Wind Projects Move Forward in Southwest and November 7, 2017, article - Colorado Utility Seeks a Greener, Lower Cost Electric Future. "As the electricity business transitions to cleaner and less-carbon-intensive generation, Xcel's experience in the market is providing further proof of the continued decline in renewable energy prices," commented Britt Burt, Industrial Info's vice president of research for the Global Power Industry.

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