What’s Xcel Energy’s proposal to replace a large Pueblo coal plant?

On October 15, Xcel Energy unveiled their replacement plan for a coal-fired power plant unit in Pueblo that is scheduled to close in 2031. 

The Colorado Public Utilities Commission (PUC) will now kick off a public process for considering the plan – we expect the first decisions in 2025, but the full process will stretch into 2026.

I wrote about what we think the best replacement plan for one of the state’s largest climate polluters should be – 100% renewables like wind, solar and battery storage. 

So what did Xcel propose? 

14 Gigawatts 

Xcel’s proposal is big. As much as 14 gigawatts big. 

The first time I heard of gigawatts was from Doc Brown in Back to the Future – 1.21 gigawatts to jump the Delorean back in time, and another 1.21 gigawatts to get it back to the future. 

A gigawatt is 1 billion watts. Thanks to the U.S. Office of Energy Efficiency & Renewable Energy 14 gigawatts would be the equivalent of:

• Over 26 million photovoltaic solar panels
• 4,116 utility-scale wind turbines
• 1.4 billion LED light bulbs
• 19.6 million horses (yep.)

Xcel Energy highlighted a number of potential scenarios, but indicated that they prefer two – a 14 gigawatt one and a 12.7 gigawatt one. Both mean Xcel is proposing to build, operate and maintain A LOT more stuff to power the Colorado homes and businesses in their territory. 

They only needed to replace the coal-fired Comanche Pueblo Unit 3 power plant, which is 850 megawatts or just under 1 gigawatt. 

So 14 gigawatts is more than 14 times what will go offline in 2031 (though the Pueblo coal plant isn’t always functioning at full capacity).

20% of 14 gigawatts is a lot gas

In their two preferred scenarios, the majority of the new energy would be renewable like wind and solar, as well as battery and storage capacity. 

But between 1.5 and 2.6 gigawatts would be new gas. That’s a lot of gas (more than Marty McFly needed to go back to the future).

Two Base Plans proposed by Xcel to replace the Comanche coal-fired power plantPhoto by Staff | Public Domain

The size of the largest gas plants in Colorado are just under a gigawatt – most are a few hundred megawatts. 

So if the PUC adopts one of Xcel’s preferred plans, Colorado will see some new, large gas plants.

And gas plants produce pollution.

In Colorado, Xcel already owns and operates six natural gas power plants. Some run year round and others are “peakers” that only run when energy demand is high. Combined, these plants produce 5.2 million short tons of carbon dioxide. That’s the equivalent of 4.7 million metric tons or the amount of greenhouse gas emissions from over 1 million vehicles.  

They also produce 933 short tons of nitrogen oxide, a powerful contributor to ozone pollution.   

Gas plants are also expensive. 

The Energy Information Administration pegged the average cost of building a new gas plant in 2022 at around $820 per KW of capacity, making a 250 MW plant cost a little over $200 million.  

That is solely construction costs and does not include the cost of fuel, which is subject to price spikes that are passed straight to customers. That also assumes the gas plant won’t have additional conversion costs in the next 20 years to a more expensive technology in order to eliminate the air pollution they produce. 

How does gas compare to other options? Looking at Lazard’s annual Levelized Cost of Energy (LCOE) report, we can make a more apples-to-apples comparison among energy costs. Onshore wind costs range from $45-$133 per MWh; utility-scale solar $24-$92 per MWh; a gas “peaker” plant is $110-$228 per MWh; and a more year round combined cycle gas plant is $45-$108 per MWh.

Lazard’s annual Levelized Cost of Energy (LCOE) report version 17Photo by Staff | Public Domain

But again, the gas power has a fuel cost that is volatile, driven by many factors outside our control. Wind and solar have no fuel costs and are not subject to such price volatility. 

Finally, in a 2023 Xcel 30-day report (reference docket 21A-0141E), the price of bids for solar+storage and wind+solar+storage are cheaper on the median levelized cost of capacity (LCOC), which is how cost for dispatchable and storage resources is usually presented.

Renewable and dispatchable RFP bids from Xcel 30-day report (21A-0141E)Photo by Staff | Public Domain

At a time when we need to be switching all of our fossil fuels to renewables to protect our health and tackle climate change, we can’t afford to build new gas plants.

Why is Xcel’s plan so big?

You may have heard that Colorado is working to “electrify everything.” 

That means transitioning nearly 1 million vehicles to electric-powered by 2030. It also means reducing our reliance on gas to heat our homes and businesses by going big on “clean heat” strategies like electric heat pumps. 

We’re also converting school buses to electric-powered, cutting pollution from gas-powered lawn mowers and leaf blowers with electric equipment and leading the nation when it comes to  e-bike policies. 

All of those new electric cars, buses, lawn mowers, bikes and heat pumps will need more energy. 

So is our race toward electric vehicles and homes driving the 14 gigawatt plan?  

Less than you’d think. 

In Xcel’s plan, they attribute 19% of the projected energy growth to electric vehicles and 12% to the electrification of homes and businesses. That’s about 4.34 gigawatts of new energy that we’ll need to transition away from fossil fuels. 

The other 9 gigawatts? That is needed for “large loads” like data centers that Xcel anticipates will want to set up shop in Colorado.   

Going too big could cost us big

Every week, there is a story about the rise of AI (artificial intelligence) and the huge computing infrastructure AI will need. That’s fueling a huge rush to build lots of data centers that require a lot of new energy generation. 

If Xcel builds 9 gigawatts of capacity and data centers swoop in to use (and, more importantly, pay for) that capacity, then the cost to Xcel customers for all this new generation could be lower. Those new data centers could also help pay for overall grid costs, benefiting homeowners. 

But if only some of the new capacity gets used, the cost of that excess capacity could be paid for by you and me in our utility bills. That’s a big risk. 

Another concern – data centers may not be the best things to plug-in to our grid.   

Data centers not only use a ton of energy, but they tend to use it 24/7. That puts pressure on our grid during peak times, when electricity capacity is limited and the cost of a kWh is expensive – Xcel already charges people more to use energy during this time as a disincentive and a way to reduce and manage “peak” energy needs. 

According to Xcel’s proposal, while data centers are about 62% of the overall energy growth they project in the next 7 years, they are 72% of the peak energy growth, meaning we will need to cut our own energy use during peak periods even more and/or Xcel will likely need to build even more expensive power generation just to ensure we don’t have power outages during peak hours.   

Finally, peak power generation is often in the form of a large fossil fuel power plant (or “peakers”), which brings a cost to our health and the planet. 

The expected growth in peak power needs is likely a main reason why, even though Xcel’s plan indicates it could produce many times more power from renewables than the retiring Pueblo coal-fired power plant produces, it’s still proposing a lot of new gas. 

The best plan – build only what we need and make it 100% renewable 

The goal right now should be to replace fossil fuel electricity with renewables as quickly as possible and have enough extra capacity to electrify vehicles and our homes.  

Electrifying transportation and our homes has a lot of benefits. It uses way more efficient technology, is better for indoor air quality and our health and it’s better for outdoor air quality and tackling climate change. 

Any plan to get there should start with conservation. The more we can cut energy waste and reduce how much energy we need to produce in the first place through energy efficiency measures, the less new stuff we need to build and the quicker we can replace gas and coal with renewable energy. 

According to the American Council for an Energy-Efficient Economy, energy efficiency can cut U.S. energy use in half by 2050. The cheapest and cleanest energy is the energy we don’t need and don’t use. 

Once you go big on energy efficiency, power everything else we need with 100% renewable electricity. 

Xcel’s testimony indicates that to meet the growth in electric vehicles and cleaner homes by 2031 we need about 4-5 new gigawatts of energy. 

And their preferred options indicate they could add 10 gigawatts of just solar and wind, more than enough to cover what we need (especially as the incredible advances we have seen, and will continue to see, in battery and storage make these renewables go even further).   

When it comes to going even bigger so we can add “large loads” like data centers – we need to ask what are we getting from data centers, given their huge energy demands and costs? 

Data centers hold promise, but it’s still risky. 

• Will the lofty promises around AI and the need for data centers come true or will consumers be on the hook to pay for excess capacity for decades to come? 
• Is Colorado the right place for the placement of data centers? And will data centers choose to locate in Colorado versus other states that may offer subsidies?
• Will the huge data center energy needs slow down our transition to a 100% renewable future? Or worse, require new gas to cover peak demands, putting our health and climate at risk?
• How much do data centers improve the efficiency of our grid? Or do they create additional pressure during peak times when energy is most expensive?

The answers to these questions are important and require a public conversation that extend beyond this PUC proposal. 

The PUC should consider focusing in the next few months on the immediate question – what energy generation will replace the Pueblo coal-fired power plant in 2031. 

Through a combination of energy efficiency measures and new wind, solar and battery and storage, we can ensure the plan replaces a coal fired power plant with 100% renewables and no new gas, but also adds new capacity for the electrification of vehicles and homes.