Allen Best: In Colorado, end almost in sight for natural gas bridge
Natural gas a decade ago was being called the bridge fuel. Burning it produces half the emissions of coal, yet it can be tapped to ensure reliable delivery of electricity. It was the bridge to a low-emissions future.
Today, natural gas is where coal was 10 or 15 years ago. We still need it for electrical generation, but the bridge no longer seems endless. But will new natural gas plants end up being like many coal plants, assets stranded long before the debt is paid?
The role of natural gas in Colorado’s energy future is being sorted out in proposals submitted to state regulators by Colorado’s two largest electrical utilities: Xcel Energy and Tri-State Generation and Transmission. Together, they deliver 71% of electricity.
These utilities expect to achieve 80% and even higher reductions in emissions associated with electrical generation by 2030 as compared to 2005 levels. Both the technology and economics of renewables and now storage align with these goals.
The preferred plan by Tri-State, the wholesaler for 17 of Colorado’s 22 electrical cooperatives, takes a wait-and-see position about new natural gas-fired generation during the next few years.
In a September filing, Lisa Tiffin, the senior manager for analytics and forecasting, explained that this will “allow emerging technologies to become more competitive in the interim and potentially displace the need” for new natural gas generation.
Most people, when buying a house, take on a 30-year mortgage. An agreement filed with state regulators last week by Tri-State, along with environmental groups, state agencies and others, calls for a shorter depreciation of just 20 years when evaluating the cost of any potential new natural gas plant.
This makes new natural gas much more difficult to justify. This shorter timeline also accords with Colorado’s statutory timeline for achieving a 100% near carbon-free electrical generation by 2050.
But what will be needed to meet demand if, for example, Colorado has a heat dome type of event in 2030 similar to that which baked people to death in Portland last June? Air conditioners would be blasting — and the wind turbines may be motionless.
That’s a central question in the plans for Xcel Energy. In addition to its own customers, the utility delivers wholesale power to utilities that serve Aspen, Vail, plus Steamboat Springs and Craig.
Xcel wants to install natural gas generation at an existing coal plant in Pawnee, which is in northeastern Colorado, beginning Jan. 1, 2026. Environmental groups are on board with this, although some want an even earlier switch.
Western Resource Advocates and other environmental groups, however, are not on board with Xcel building other new gas plants. Xcel estimates it will invest $1 billion in natural gas capacity. Those gas plants, it says, will be used rarely but necessarily to ensure reliability.
The Colorado Oil and Gas Association supports Xcel’s plans and wants to see no time wasted. Natural gas, it said in a filing last week, will “play this critical reliability and resilience role that makes renewable energy possible.”
The industry group also supports Xcel’s argument that the natural gas infrastructure can later be adapted to use green hydrogen, if and when that technology becomes affordable. Renewable energy and water are used to create green hydrogen, which can be stored. COGA and Xcel say another potential path is to use natural gas plants retrofitted with carbon capture and storage technology. That technology also cannot yet compete in cost or scale.
Environmental groups argue instead for battery storage, already part of Xcel’s plans, playing an even larger role. Interwest Energy Alliance, representing primarily wind developers, accused Xcel last week of old-school thinking: “The technological changes that are coming to the entire utility industry are unfathomable to those stuck in the central station combustion thought paradigm.” Batteries, though, remain an imperfect solution.
The Colorado Energy Office wants Xcel to be required to invest in demand-response programs, shifting demand and suppressing it through energy efficiency. This, it points out, will be less expensive than Xcel investing in up to 300 megawatts of additional gas generation.
What all agree upon is that Xcel’s filing constitutes a landmark. Perhaps never before has the state’s Public Utilities Commission seen a proposal for so much rapid change. One example: the social cost of carbon is being used for the first time to evaluate proposals. Xcel, in a related proposal, wants to spend $2 billion alone on new transmission. The energy landscape has changed — and likely will change just as dramatically in the next decade.
The state’s three PUC commissioners are expected to issue a decision sometime in March about both the Tri-State and Xcel pivots. Part of those big decisions will be about the role of natural gas.
Allen Best publishes Big Pivots, a reader-sponsored journal devoted to Colorado’s energy and water transitions. See more at BigPivots.com.
Editor’s note: This column has been updated to reflect Tri-State has 17 members in Colorado.