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Report: Xcel Energy’s proposed gas plant in Colorado is more expensive than clean energy options

Posted by Adam Winer on Nov 9, 2023
DENVER, CO – An analysis of the electric resource plan (ERP) for Xcel Energy’s Colorado subsidiary, the Public Service Company of Colorado (PSCo), found that a portfolio of clean energy resources – including solar, wind, and battery storage – would be a more cost-effective way to power Colorado homes and businesses compared to building a new natural gas “peaker” plant. The independent report from Strategen Consulting found that a clean energy portfolio would provide $28.9 million in savings compared to a new gas plant in the first year of operation, with savings in subsequent years anticipated to be even greater.

“Unfortunately, Xcel is proposing to build 600 megawatts of new natural gas, which is a missed opportunity to provide Colorado households and businesses the best-cost and cleanest energy,” said Brian Turner, Director at Advanced Energy United, a national business association that commissioned the report. “Colorado’s utilities are supposed to be planning for a fully decarbonized energy system, but building new gas plants makes that much more difficult.”

When Xcel Energy’s PSCo asked for project proposals from competitive generation developers last year, it received almost 800 bids for new renewables and batteries, many of which were cheaper than gas. It was a great success, reflecting both progress of advanced energy technologies and the favorable tax credits of the Inflation Reduction Act. PSCo took advantage of these lower costs by proposing more renewables and less gas than it had originally planned, but the utility still proposes building 600 megawatts of new gas infrastructure, leaving money on the table and ratepayers on the hook.

“We should choose technology that helps us avoid what happened last winter when the price of natural gas skyrocketed, leaving ratepayers with high bills,” added Turner. “Natural gas prices are a rollercoaster, and building new gas plants means Coloradans are stuck riding this rollercoaster for decades to come."

Natural gas combustion turbines have been traditionally favored by utilities for providing power during times of peak demand, but many have struggled to perform during recent winter storms across the U.S. In many cases, battery storage technology is performing better than gas at providing power rapidly and reliably.

Building a new gas turbine also poses the risk of it becoming a stranded asset. As the cost of renewable energy continues to decrease – boosted by the federal Inflation Reduction Act – new gas infrastructure could leave ratepayers on the hook paying billions of dollars for a resource that may one day soon no longer produce any energy.

Advanced Energy United cited the new analysis from Strategen Consulting in its comments submitted today to the Colorado Public Utilities Commission (PUC).  

Click here to learn more about Advanced Energy United's work advocating for 100% clean energy and electrified transportation in Colorado.

Topics: Press Releases, Colorado, Brian Turner