Xcel Energy’s Ambitious $5 Billion Plan to Meet Growing Electricity Demands
Xcel Energy is embarking on a significant investment initiative, proposing to allocate approximately $5 billion over the next five years. This investment aims to enhance the power delivery system to accommodate the increasing demand for electric vehicles, rooftop solar installations, and a transition away from fossil fuels.
The new distribution system plan unveiled by Xcel is designed to mitigate wildfire risks and is integral to the company’s strategy to increase the use of renewable energy and reduce greenhouse gas emissions.
This initiative aligns with Colorado’s recent legislation that mandates major electric utilities to enhance their distribution systems to meet state objectives of reducing reliance on fossil fuels and promoting electrification.
Robert Kenney, president of Xcel Energy-Colorado, emphasized a shift in approach, stating, “I would say historically, we’ve made incremental investments in the distribution system to handle what’s happening right now. What we’re moving to is a proactive and forward-looking planning of our system, anticipating where we think the future’s going.”
The proposed distribution plan, pending regulatory approval, would cover the period from 2025 to 2029. It intends to add roughly 3.1 gigawatts of new capacity, equivalent to the energy needs of about half a million homes.
Kenney highlighted the ongoing efforts, “This is a continuation of a lot of work that we’ve been doing to strengthen and harden our system and to enable the clean energy transition to support the state’s emission reduction goals while simultaneously building a system that gives our customers the choice to use air source heat pumps, rooftop solar, more distributed energy resources.”
Xcel’s service area currently includes about 100,000 electric vehicles, with projections indicating an increase to over 400,000 by 2029.
The utility also noted that while the number of heat pumps on its system is currently in the “single-digit thousands,” it needs to expand to hundreds of thousands by 2030 to achieve Colorado’s clean-energy targets. An air-source heat pump utilizes electricity to transfer heat to or from a building.
The plan details the construction of new substations, feeder lines, and the addition of 2,200 megawatts of new rooftop and community solar capacity. One megawatt can power several hundred to 1,000 homes, depending on various factors.
Jack Ihle, regional vice president of regulatory planning and policy for Xcel in Colorado, pointed out that increasing demand from existing customers is driving this expansion. He noted, “These loads that residential and commercial customers are driving are really pushing for a larger grid.”
The overall cost of the distribution plan is estimated at $7.5 billion, with approximately $2 billion earmarked for wildfire risk reduction as climate conditions shift. This proposal complements a broader $45 billion capital investment proposal spanning Xcel’s eight-state territory.
In a statement from October, Xcel officials indicated that about $22 billion of the proposed investments would be directed to Colorado, potentially leading to rate increases of 2% to 2.5% annually for customers in the state.
Energy demand in Colorado is expected to double within five years, increasing from a peak of around 7,200 megawatts to 14,000 megawatts, according to Xcel.
Original Story at www.denverpost.com