Colorado picked for $250M to strengthen electric grid

AURORA — Colorado’s Energy Office, in partnership with Xcel Energy Services Inc., has been selected to receive a $250 million investment from the U.S. Department of Energy to strengthen a key transmission connection between Colorado and Texas, a project that will help Colorado meet growing electricity demand, improve reliability and expand access to lower-cost power.

‘This means lower costs and fewer outages for Coloradans,” Gov. Jared Polis said when announcing the investment Thursday. “By strengthening Colorado’s electric grid and expanding our ability to share power with other regions, we can better protect families and businesses during extreme weather and periods of high demand while continuing to save people money. Electric grid improvements are exactly the kind of long-term investment our country should be making to strengthen our economy and save people money.”

The Colorado side of the connection will move from Lamar to the higher-capacity May Valley substation, connecting it directly to the Colorado Power Pathway transmission network.

 Together, these improvements will help reduce strain on the grid, prevent outages and give consumers access to more sources of lower-cost electricity by drawing from a larger pool of energy sources. By upgrading existing equipment and power lines instead of building entirely new transmission corridors, the project can also increase capacity while limiting construction costs and land use impacts, officials said.

“President (Donald) Trump’s Department of Energy is making significant investments in energy infrastructure to power America’s future and lower costs for hardworking families and businesses,”  Tim J. Walsh, assistant secretary for environmental management at the Energy Department, said as the award was announced. “This $250 million investment will ensure that households in Colorado and across the Western United States have access to secure, abundant and reliable power, even during severe weather and periods of increased demand.

“Affordable, reliable energy is the fundamental building block of a thriving economy and vibrant communities,” Walsh said, “and President Trump and Secretary (Chris) Wright are committed to securing America’s energy future.”

The nation’s power grid is divided into large regional systems that currently have a limited ability to share electricity between them, making it difficult to manage the demands of multiple energy grids. The Colorado-to-Texas Western-Eastern Intertie Modernization Initiative, or CO2TX, will upgrade an aging connection near Lamar that allows electricity to move between the Western and Eastern grids.

Thursday’s announced federal funding will support the project’s total $1.2 billion cost with the Department of Energy’s $250 million contribution and Xcel Energy’s 80% match, cementing the project’s financing.

“Updating and improving our power grid infrastructure is essential to ensure Coloradans have access to reliable, low-cost clean energy throughout the day and year round,” said Will Toor, executive director of the Colorado Energy Office. “Xcel Energy Services Inc’s proposed project will allow optimized use of clean energy resources across a much larger geographical footprint which will save Coloradans money on energy costs. We are grateful to the Department of Energy for investing in Colorado’s grid resilience to benefit our regions for years to come.”

The project will replace older equipment with a modern system that can move electricity more reliably between the two grids. It will also upgrade existing power lines with higher-capacity wires, allowing lines to carry more electricity without building entirely new transmission corridors. Specifically, the project will increase the amount of electricity that can move between the two regional grids from 210 megawatts to 700 megawatts, with the ability to expand to 2,000 megawatts as demand grows.

Upgrading the connection and expanding Colorado’s ability to bring more energy onto the grid will also create new economic opportunities and good-paying jobs, the officials said. Qualifying construction work on the project will be required to meet federal apprenticeship utilization and prevailing wage standards. This will help to train the next generation of skilled workers and ensures Coloradans building the state’s energy future earn competitive wages.

The funding behind today’s announcement was made available through the Infrastructure Investment and Jobs Act of 2021, which authorized DOE’s Grid Resilience and Innovation Partnerships initiative, and the Speed to Power through Accelerated Reconductoring and other Key Advanced Transmission Technology Upgrades (SPARK) funding opportunities. Colorado was selected through the SPARK program.

“Reliability is at the heart of this project and everything we do at Xcel Energy,” said Robert S. Kenney, president of Xcel Energy Colorado. “Modernizing the Lamar Tie will strengthen the connection between the Western and Eastern electric grids, helping us better serve customers during extreme weather, meet growing energy needs and make the most of affordable energy resources across the region. With support from the Department of Energy, this smart, cost-effective investment will strengthen reliability and deliver long-term value for customers and communities today and into the future.”

The energy office is the prime recipient, with Public Service Co. of Colorado and Southwestern Public Service Co., both Xcel subsidiaries, providing the funding match, system planning, design and implementation. Southwest Power Pool will provide regional coordination and grid expertise.

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