Developers Warn Denver's Energy Transition Is Outpacing Grid Capacity Needed For Growth

As Denver moves toward its goal of a 100% renewable energy grid, local developers are raising concerns that the transition's timeline doesn’t align with growing energy demand.

Uncertainty in securing power for new projects complicates timelines and budgets for developers and tenants and could intensify in coming years as coal-fired plants are decommissioned.

“[Tenants] need to know that the power is actually available and will be in place by the time they occupy, or they can elect to move on from a new facility if that power isn't effectively committed and on-site,” Confluent Development President and Chief Development Officer Celeste Tanner said.

Denver is aiming for all new buildings and homes to have zero emissions by 2030, with all buildings at zero emissions by 2040. Similarly, the state is working to have net-zero emissions by 2050.

In conjunction with those efforts, Xcel Energy has its own goal to deliver 100% carbon-free electricity by 2050, with an interim goal of cutting carbon emissions 80% by 2030. To accomplish this, the utility plans to take several coal power plants offline in the next few years and replace them with more eco-friendly alternatives.

The push to transition to renewable energy is coming at the same time as an increase in demand from the proliferation of data centers and the growth of industries such as advanced manufacturing and aerospace.  

Power shortages are increasingly common across the U.S., especially as data centers proliferate. But Colorado has comparatively few data centers, and Denver's mayor has proposed a moratorium on the energy-hungry facilities. 

In a statement, an Xcel representative said the company expects demand to grow an additional 1,000 to 2,000 megawatts in the next several years, and it’s planning to invest $17.6B in Colorado’s energy infrastructure over the next five years to support that growing demand.

“We know that the economic growth and prosperity of our communities depend on our ability to deliver energy when and where our customers need it while keeping bills as low as possible,” Sydney Isenberg, Xcel media relations representative, said in a statement.

But developers say those additional energy sources can’t come fast enough. 

Initial power capacity has been restricted to an as-needed basis, instead of allowing developers to project the total demand a building will need, leaving buildings “effectively under-committed for power for future users,” Tanner said. The as-needed policy introduces uncertainty and risk by adding more time and steps for new users. 

Perhaps the highest-profile local example of a project being stalled by a lack of power is the relocation of a planned $475M Swire Coca-Cola bottling plant from the Denver area to Colorado Springs. Swire changed course last year after having difficulty securing utility connections to its preferred site near Denver International Airport, according to the Denver Business Journal.

Denver developer Formativ has faced issues with projects that were “not promised permanent power,” according to CEO Sean Campbell. 

“It is incredibly expensive to build, and if you're not guaranteed power at the end of the day, that is a recipe for disaster,” Campbell said.

The problem stems from the timing of the transition to renewable energy, Tanner said, even though it’s an end goal she supports.

“Let's slow the pace of taking offline existing power sources that are reliable and will allow us to utilize power effectively while we are concurrently building out the infrastructure we need to become a 90% to 100% renewable economy,” Tanner said.

There should be more collaboration between the city and state officials who are setting renewable energy goals and Xcel to ensure the infrastructure can keep up with the change, Campbell said.

“If you're going to try to attract businesses like manufacturing, data centers or distribution centers that have big power needs, or even to build housing … and you want all of that to be electrified, you better be playing offense on how you're working with Xcel Energy to expedite their improvement and expansion of the grid,” he said.

Xcel said it has many initiatives in the works to balance the transition to clean energy with its predicted demand, including the Just Transition Solicitation, which is its plan to phase out coal. The JTS will issue requests for proposals this summer to acquire additional capacity, Isenberg said.

And in January, Xcel received approval to add 3,200 MW of new renewable energy and gas capacity.

“When fully implemented, our resource plans would roughly double renewable capacity across our territories by 2030 while leveraging federal tax credits to enhance affordability and add new natural gas generation needed for reliability insurance,” Isenberg said.

Tanner said she is hopeful for a better approach to implementing the transition goals.

“I think people are starting to see the impacts to homeowners, business owners and new businesses coming to the state,” she said. “I hope that those conversations and the strategies again can keep pace, so that we're not losing opportunity in this cycle for business development.”