Xcel Energy is in a dash to capture renewable energy tax credits before the Trump administration sunsets them.
On Monday the company filed a motion with the Colorado Public Utilities Commission to expedite approval of 4,500 megawatts of generating and battery resources. On Friday it is issuing a request for proposals or RFP — hoping for a PUC greenlight.
“We are advancing the RFP prior to potential commission approval,” Xcel Energy said in a statement. “This will be done to provide sufficient notice to allow bidders a better chance to begin to develop responses.”
The motion by Xcel Energy is being supported by the PUC staff, the Colorado Energy Office and Colorado Office of Utility Consumer Advocate.
“There is great potential benefit to Colorado and Colorado ratepayers in moving as quickly as is possible to get wind and solar projects under construction on the timeline that will allow them to receive those tax credits,” said Will Toor, executive director of the energy office.
On Aug. 1, Gov. Jared Polis sent a letter to 11 agencies, including the energy office and the PUC, saying “we have a time-limited window for procurement of tax-advantaged wind and solar.”
To that end, Polis said, “the state commits to eliminate administrative barriers and bottlenecks for renewable projects.”
The Trump administration’s tax and spending bill, signed into law July 4, sharply limited two key tax credits for renewable energy development: the Production Tax Credit and the Investment Tax Credit.
The investment tax credit allows for a credit of 30% of the cost of a project and the production credit 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, 2026 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 and their loss will raise the cost of generating solar by an estimated 50% and double the cost of wind, according to clean energy consultant Energy Innovation. Both, however, still remain among the cheapest generation.
“The administration has taken irresponsible actions to drive up the cost of electricity across the nation, and that the intent here is to do what we can at the state level to the extent possible to mitigate the impact on Colorado ratepayers,” Toor said.
Under Xcel Energy’s plan it will seek 4,000 MW of renewable generation, 300 MW of natural gas-fired generation and 200 MW of their natural gas or battery storage.
The request for the proposed project goes out Aug. 29 and bids must be in by Oct. 6. In the middle of that Xcel Energy hopes the PUC will sign off on the plan. Projects will be chosen by January 2026 with PUC approval.
Ratepayer protections built into the bids
To protect the utility’s ratepayers in this scramble, developers will have to show they have a reasonable path to get the tax credits, be required to hold to the price quoted and look to use existing transmission lines.
Developers will also have to show the cost of their projects with and without tax credits, “so that we understand, are we really capturing customer benefit,” said Keith Hay, the energy office’s managing director for policy.
“We support the motion,” said Joe Pereira, deputy director of the Utility Consumer Advocate. “Any credits we can capture will save customers money.”
The bids will have to include existing tariffs but could increase up to 15% if new tariffs are levied by the Trump administration.
Under the plan half the new capacity will be owned by Xcel Energy and half will be owned by independent power producers who sell electricity to the utility on long-term contracts.
The target is to begin construction by next July and have the projects online by the end of 2028.
Xcel Energy is in the middle of setting a new electric resource plan, called the Just Transition Solicitation, or JTS, in which it projects it will need at least 8,500 MW of capacity with data centers one source of growing demand.
“Unprecedent growth in demand places strains on the system in ways we’ve not experienced in recent memory,” the company said in a statement. “We want to make sure we have adequate resources to serve this unprecedented demand.
When Xcel Energy proposed its last electric resource plan in 2023 it estimated that it might be able to capture $10 billion in federal tax credits in the Biden administration’s Inflation Reduction Act.
On Aug. 15, the Trump administration tightened the definition of construction. For wind projects it means activities such as putting in foundations and roads and for solar by installing racks for solar panels. Signed contracts for the manufacture of equipment also qualify.
A project under continuous development also can four years to be completed and still qualify for the tax credits.
More changes, however, may be coming, according to the accounting and consulting firm Novogradac. The rules on imported wind and solar equipment are still pending and “the agency could take further action on the beginning of construction as well,” a Novogradac analysis said.
“There is a lot of uncertainty about what the administration will do, but we’re planning for what we know they’ve already done,” the energy office’s Hay said.