Building a grid good enough to support thousands of new EVs and heat pumps will cost Colorado Xcel customers $5 billion

Visible power lines surrounding the Xcel Cherokee Power Station with the Denver skyline in the distance on December 4, 2024. (Kathryn Scott, Special to The Colorado Sun)

State’s largest utility wants new and improved substations to meet “a demand on the grid we haven’t seen since the advent of air conditioning”

Xcel Energy, seeking to meet an increasing demand for electric vehicles, rooftop solar arrays and heat pumps and general growth in electricity use, is proposing a $5 billion plan to improve the links between the grid and homes and businesses.

The company recently submitted its 443-project distribution service plan to the Colorado Public Utilities Commission, which must approve the proposal in a process that could take a year.

The investments in 35 new substations, 108 upgraded or new substation equipment, and more than 300 distribution feeders, between 2025 and 2029, would raise the average residential bill $8.71 by 2029 to $105.37 and the average small commercial bill by $10.24 to $131.

“This is being driven by increasing load growth,” Robert Kenney, CEO of Xcel Energy’s Colorado subsidiary, said in an interview. “It is a demand on the grid we haven’t seen since the advent of air conditioning.”

Xcel projects the number of electric heat pumps replacing gas furnaces will grow to 300,000 by 2030 from the current 5,000 on the system and that EVs will quadruple to 400,000 over the same period.

Residential solar is expected to more than double to 1,500 megawatts and community solar more than triple to 700 MW, which also tax the distribution system as they put extra electricity on the grid.

“We need to do more proactive investment to keep up with the unprecedented demand,” Kenney said. The plan is designed to add 3,100 MW of capacity to the distribution system which takes electricity from the high voltage grid, reduces the voltage and delivers it to homes and businesses.

“We do expect increased reliability, increased security of the grid and reduced outages,” Kenney said. “It serves multiple purposes.”

A second driver for the distribution plan is the push in Colorado to “decarbonize” the energy used in the state thereby cutting greenhouse gas emissions.

Kenney said that the company is on track to meet the state requirement that the utility cut its emissions 80% from 2005 levels by 2030, but to meet the state’s overall targets more clean energy needs to be made available to the transportation and heating sectors.

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Article by Mark Jaffe/Colorado Sun