Xcel Energy has 6.2 gigawatts of generating capacity in Colorado, but the company already has pending applications from data centers seeking 5.8 GW of electricity — enough to power more than 3 million homes.
By 2040, the power company expects a data center load to be 8.5 GW.
In the face of this booming demand — particularly in an area of Denver and Aurora being called Data Center Row — Xcel Energy is seeking to add 12 to 14 GW of new generation and transmission. The price tag is $22 billion.
The question, however, is how much of that is real, for the risk is that Xcel Energy will build it and nobody — or at least not so many — will come.
“Without caution, ratepayers face significant risk of bearing the costs of stranded assets,” Colorado Energy Consumers, or CEC, which represents Xcel Energy’s industrial and large commercial customers, said in a filing to state regulators.
The Colorado Public Utilities Commission is already expressing skepticism about the forecast of Xcel Energy’s subsidiary Public Service of Colorado, or PSCo. The company expects to have a total demand of 8.5 GW by 2031.
“This is a really massive load forecast far in excess of what we’ve seen on the system, not to say it can’t happen,” PUC Commissioner Megan Gilman said at a meeting Aug. 6, adding “the vast majority of that forecast is far from certain.”
PUC Chairman Eric Blank said Xcel Energy in its pending electric resource plan — which calculates the utility’s electricity demand and the resources needed to meet — should have a load of about 5 GW or no more than the company’s low-end forecast of 7.6 GW.
“There is so much uncertainty now that we need to approach this decision with humility,” Blank said.
So how many data centers are likely to come to Colorado?
Industry and consumer advocates caution that figuring out the real demand and therefore the real need for investment is difficult in the data center gold rush now underway, especially in the face of rising costs.
And so the watchword is “uncertainty,” according to Colorado Energy Consumers.
“This uncertainty is driven by a variety of factors, including the emergence of new large loads, increasing resource costs, unpredictable U.S. tariff policies, supply chain constraints, and the partial repeal of tax credits,” CEC said in a PUC filing.
“The company is largely unable to accurately forecast its projected load growth, the amount or type of capacity it must acquire, or the cost,” CEC said.
In a measure of how volatile the data center market is, CEC said that between October and May, seven potential data customers representing 4 GW of load withdrew service requests and more than a dozen new prospects with 3.5 GW of load filed service requests.
“PSCo expects this trend of uncertainty to continue, which places the commission in the challenging position of selecting a load forecast based on a shifting baseline,” CEC said.
Wood Mackenzie, a research and consulting group, said it is tracking 134 GW of proposed data centers across the U.S., up from 50 GW last year, but grid operators have received interconnection requests far exceeding this load.
“Some developers have bagged spots on multiple queues, hoping one of them will pay off,” Wood Mackenzie said.
One so-called hyperscale data center is being built by QTS Realty Trust in Aurora. When completed, its 177-megawatt capacity will make it Xcel Energy’s single largest customer.
Still, few of these facilities may be built here, according to John Dinsdale, an analyst with Synergy Research Group.
“Colorado really hasn’t been a major target for hyperscale operators and there is very little activity in terms of developing large data centers or campuses,” Dinsdale said in an email. “Looking at our known future pipeline of data being developed, that is unlikely to change much any time soon.”
The state is a center for “colocation” data centers that lease computing assets to various customers. “Denver accounts for a bit under 2% of the U.S. market for colocation, which is roughly in line with Colorado’s share of U.S. economic activity,” Dinsdale said.
Colocation data centers are being built or expanded in Colorado by several companies — including CoreSites, Flexential and Novva Data Center. The power demands for these operations tend to range from 18 MW to 40 MW.
There are 48 data centers, primarily colocation facilities, in the Denver metro area, according to Data Center Map. In its five-year plan, Xcel Energy said it is expecting only 318 MW of new data center demand.
However many data centers do come online, the question of who pays for them remains.
“We are bringing data centers that don’t fully cover the cost they impose on the system, it seems to be entirely on customers,” the PUC’s Blank said in May.
The CEC and the Colorado Office of Utility Consumer Advocate, which represents residential and small commercial customers, both pushed for a separate large load rate to protect their constituents.
Xcel Energy has agreed to file a large load tariff in 2026. In the meantime the company has proposed a “robust suite of customer protections,” including a nonrefundable up-front deposit; a minimum bill; minimum contract terms; security/collateral requirements; and exit fees for any customer seeking 100 MW or more.
“To be clear,” Xcel Energy said in a statement, “we will not engage in contracts with data centers that will disadvantage our residential customers.”
“The principles Xcel is using are still too generous to data centers,” said Joe Pereira, deputy director of the Office of the Utility Consumer Advocate. The UCA is calling for longer-term contracts and higher exit fees.
“How we manage these loads will have a big impact on rates,” Pereira said. “If we don’t properly set guidelines and principles for these loads, residential customers will be on the hook for these costs.”