Aiming to get energy generation and storage projects started before federal tax credits expire, the Colorado Public Utilities Commission on Jan. 28 approved an expedited list of 1,700 megawatts of projects for Xcel Energy.
Still, the commission expressed reservations about the cost and operating efficiency of so many projects and wants more data and analysis.
“It doesn’t feel right to me,” PUC Chairman Eric Blank said. “I treat customer money like my own money. … I am looking for a little certainty that we are not going to deeply regret this.”
The Trump administration’s tax and spending bill, signed into law July 4, curtailed two key tax credits for renewable energy development: the production tax credit and the investment tax credit.
The investment tax credit is equal to 30% of the cost of a project, and the production credit, used primarily by wind projects, provides for a credit of 2.75 cents for each kilowatt-hour produced during the first 10 years of operation.
To be eligible, a project must begin construction by July 4 and if it starts after that date, it must be in operation by the end of 2027.
The credits can offset as much as 50% of project costs. Losing them could raise the cost of generating solar power by an estimated 50% and double the cost of wind energy, according to clean energy consultant Energy Innovation. Both, however, still remain among the cheapest sources to generate power.
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“We are really trying to walk this line of getting as much as we can before the price goes up — that is prudent to do — doing so with less information than is ideal and with all of these swirling uncertainties about the prospect of cost increases in the future,” Commissioner Megan Gilman said.
The commission approved bids for a 200 MW natural gas plant, 600 MW of wind, all coming on line by 2028, and 300 MW of battery storage. Some of it would be owned by Xcel Energy and some purchased on long-term contracts from independent power producers.
“It is clear we need dispatchable resources in the Denver metro area,” Blank said, in urging adoption of the natural gas plant bid.
The commission tentatively approved a 600 MW Xcel Energy wind project pending some additional analysis. “I am struggling to sign off on rate-basing a $1 billion to $2 billion investment without having these analyses,” Blank said.
An additional 1,000 MW of solar and 700 MW of storage will be needed, Blank said, and the final portfolio will range somewhere between 3,200 MW and 3,500 MW — levels suggested by Western Resource Advocates and state agencies.
Xcel Energy had proposed a project portfolio totaling 4,900 MW.
Natural gas plants OK’d to remain open, too
Xcel Energy is in the midst of developing its electricity resource plan, which sets out the projected electricity demand for the next two to five years and the resources to meet them. The utility projected it will need at least 8,500 MW to meet growing demand. It will, however, be months before the plan, known as the Just Transition Solicitation, or JTS, is finalized.
“It is too risky to wait for the bulk of the projects to go through the JTS,” Blank said.
Nevertheless, Blank called for more data on bids, particularly looking at the transmission costs of locating solar and storage projects outside the Denver area, even though the bid prices are lower than those inside the metro area.
“These are multibillion-dollar decisions, my gut says it is worth it to put storage and solar in the Denver metro area,” Blank said, “but I am not prepared to make multibillion-dollar decisions based on my gut.”
The commission also approved extending the life of four natural gas-fired plants — Fruita, Fort Lupton 1 and 2, and Valmont in Boulder County — to 2028. They were scheduled to close in 2026.
Xcel Energy said in a filing it needs the units to ensure grid stability in northeastern Colorado and to help make up a short-term gap in generation in 2027 and 2028. The units will provide 90 MW of capacity for summer demand.
The commission approved the extensions without discussion. In December, the PUC agreed to extend the operations of the Comanche 2 unit in Pueblo for 12 months. The coal-fired power plant was scheduled to close at the end of 2025, to compensate for Comanche 3 breaking down.