A bill headed to the desk of Colorado Gov. Jared Polis aims to jump-start the state’s electrification goals by focusing on overlooked infrastructure, the latest move to help the U.S. grid prepare for rising power demand.

The legislation would force Xcel Energy, the largest electric utility in Colorado, to make upgrades to the distribution system — the set of wires and transformers that brings power to homes and businesses and increasingly takes in power from rooftop solar panels and home batteries.

That system is being taxed as the state works to meet goals to deploy more low-carbon energy sources, electrify vehicles, and transition homes and businesses away from fossil fuel energy.

Without new transformers, substations or wires, some homeowners have been prevented from installing solar panels and energy storage batteries. Mike Kruger, president of the Colorado Solar and Storage Association, said some housing developers have even been asked to pay for the distribution system upgrades themselves, a steep cost that can halt projects tied to clean energy in some neighborhoods.

“We have example after example of the current paradigm failing, both to meet new load and to accommodate new resources,” Kruger said. “The grid we have is in no way designed for a fully electrified future and to meet increased demand and generation as we switch from carbon energy to clean electrons.”

The Colorado bill, S.B. 24-218, would require Xcel Energy — the Minnesota-based utility that serves 1.6 million Colorado electric customers — to file a plan with state regulators on how it will upgrade the distribution system over the next five years. That plan would prioritize wire and infrastructure upgrades in traditionally underserved neighborhoods, including lower-income neighborhoods that have been disproportionately affected by pollution and tend to have less investment in clean energy.

It allows Xcel to temporarily raise electricity rates for customers to pay for short-term upgrades and to eventually add a fee covering the project’s cost, although cost recovery is capped.

The bill passed both chambers with bipartisan support. Polis, a Democrat, is expected to sign the bill.

Shelby Wieman, a spokesperson for Polis, said the governor “will review the final version of the bill when it reaches his desk.”

Tyler Bryant, a spokesperson for Xcel, said in an email that the bill “provides both a near and long-term framework to transform the distribution system into one that will meet customer needs more quickly with a wide range of electrification and other low-emission technologies — all while keeping bills low."

“The bill builds on existing requirements for our distribution system plans to increase customer adoption, especially in disproportionately impacted communities, of electric vehicles, beneficial electrification and community and rooftop solar to meet the state’s clean energy goals,” Bryant added.

The Department of Energy found in an April report that the distribution grid “will need to evolve from its current state” as Americans adopt more distributed energy resources, such as batteries, solar energy, electric vehicles and smart appliances.

“Failure to address foundational grid modernization capabilities in a timely manner will create significant barriers to a more distributed electricity system and impede the utilization of [distributed energy resource] services and, perhaps most importantly, decarbonization through electrification,” the report found.

Emilie Olson, a senior principal with the clean energy group Advanced Energy United, commended lawmakers who supported the Colorado bill for “thinking comprehensively about the needs of the distribution system in alignment with the state’s decarbonization goals.” The forward-looking approach, she said, makes Colorado’s effort unique.

According to data from DOE and the Lawrence Berkeley National Laboratory, 19 states and the District of Columbia require distribution system plans. They range from multiyear distribution upgrade plans to cost-sharing requirements to interconnection changes that can speed up rooftop solar and battery deployment.

Olson said that Colorado’s approach stands out because it would require Xcel to fit its plans around Colorado’s goal to fully decarbonize the economy by 2050. That means system upgrades can be targeted in areas where electric vehicles are expected to flourish or where a new all-electric housing development will be built, rather than on an ad-hoc basis.

“This bill calls for a much more granular, localized look at the grid to make sure we’re prioritizing accordingly and doing that with discipline,” Olson said. “That’s a lot more direction than we’ve had in the past.”

Besides its 2050 goal, Colorado has a target of reducing greenhouse gas emissions 50 percent below 2005 levels by 2030. The state also has a goal of seeing 940,000 light-duty electric vehicles deployed by 2030 and to nearly fully transition the light-duty vehicle fleet to electric models by 2050.

The new bill would establish a virtual power plant program that allows Xcel customers to link distributed energy resources such as rooftop solar panels and use them to store and send energy back to the grid in times of need.

That, said Kruger of the Colorado Solar and Storage Association, would help Xcel avoid investing in new power plants to serve temporary peaks in demand — and could even save on distribution upgrades by better using resources that are already on the grid.

Although the distribution system upgrades will come with higher customer costs, Kruger said he hopes regulators can maximize the impact of upgrades and use a long-term planning horizon to make sure money is being spent wisely. Additionally, he said, the plan carries benefits by avoiding pollution and accelerating the phase-out of fossil fuels.

“This is the final piece of unlocking all of the public policy goals to clean energy, clean air, clean water,” Kruger said. “It utterly changes the paradigm and moves us to our end goals.”

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