Xcel Energy has asked state regulators to sign off on a plan to fast-track bids on up to 4 gigawatts of renewable energy projects so it can take advantage of federal tax credits before they’re eliminated.
Proposals by utilities to add new power sources can take months or longer before the Colorado Public Utilities Commission. But Xcel hopes to get the go-ahead by Friday to start the process. The PUC staff, the Colorado Energy Office and the Utility Consumer Advocate office joined the motion submitted by Xcel late last week.
Time is of the essence, the motion said, because the federal tax and spending bill signed into law July 4 rapidly speeds up the phasing out of tax credits of up to 30% for renewable energy projects. Under the new laws, wind and solar projects qualify for the tax credits only if they are placed in service by Dec. 31, 2027, or construction starts before July 5, 2026.
Gov. Jared Polis directed state agencies to streamline and accelerate clean energy projects to try to beat the deadlines.
“We see this as very much about protecting Colorado ratepayers from actions by the federal administration and Congress,” said Will Toor, executive director of the Colorado Energy Office.
Toor said the request by Xcel is also in line with the governor’s Aug. 1 directive about prioritizing renewable energy projects to meet the new deadline for tax credits “in order to be able to pass those savings along to Colorado ratepayers.”
The greatly expedited timeline for considering the renewable projects proposes that Xcel Energy start soliciting bids as early as the end of this week along with suggested deadlines for comments from outside parties and a written decision by the PUC in early February.
“We believe that these tax credits will help pay for cost-effective generation greatly needed to uphold our commitment to providing our customers with the clean, reliable, safe and affordable energy. Unprecedented growth in demand places strains on the system in ways we’ve not experienced in recent memory,” Xcel Energy spokeswoman Michelle Aguayo said in an email.
The motion seeks approval of a process at the PUC that would potentially result in up to 4,000 megawatts of renewable energy as long as it’s clear that the projects would take advantage of the federal tax credits, said Keith Hay, managing director of policy at the energy office.
The push to qualify new wind and solar facilities for the disappearing tax credits comes as the PUC is in the thick of deliberations on a proposal by Xcel Energy to add several thousand megawatts of new sources of electricity over the next five years. The plan by Colorado’s largest electric utility would replace coal plants that will be shut down; finance a transition from coal-reliant economies for communities and workers; and meet rising demands driven by more electric vehicles, electrification of buildings and large computing centers being built to accommodate the expanding use of artificial intelligence.
Parties to the deliberations on the so-called just transition plan have criticized it as bloated and too expensive. The members of the utilities commission have questioned the need for the amount of new resources sought by Xcel, which initially proposed adding up to 14 gigawatts, or 14,000 megawatts.
There are many variables, but one gigawatt, equal to 1,000 megawatts, is enough to power roughly 340,000 homes.
The proposal to speed up wind and solar projects to land tax credits wouldn’t hold up proceedings on Xcel’s longer-term, more comprehensive plan, according to the motion. The PUC is considering the first phase of the just transition plan. The second phase will look at the kind and amount of energy resources Xcel proposes.
“The energy resources we anticipate acquiring through this request are separate from the forthcoming Just Transition Solicitation and may reduce but not eliminate the long-term generation needs forecasted to reliably and affordably serve all customers,” Aguayo said.
Hay acknowledged that the motion’s quick timeframe is unusual, but added that the swift phase-out of the federal tax credits created unusual circumstances.
“What we are seeing from literature is that wind and solar will continue to be the cheapest option for energy going forward, but that as the tax credits expire, that cheapest resource gets more expensive,” Hay said.
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