Can data center developers help Xcel Energy drive down emissions? — Allen Best (BigPivots.com)

Xcel Energy has submitted a proposal to the Colorado Public Utilities Commission (PUC) for a new large-load tariff specifically targeting data center developers in Colorado. The utility's Vice President for Data Centers and Large Loads, Jack Ihle, stated that Xcel believes this tariff will help meet its legal obligation to reduce emissions by 80% by 2030, while simultaneously accommodating the growing electricity demands of data centers, which typically require 50 megawatts or more. This move comes amidst Xcel's concerns about resource adequacy, particularly in the near term, following issues with its Comanche 3 coal unit and discussions about potentially delaying the retirement of Hayden coal units. Xcel views data center developers as crucial partners in exploring and deploying next-generation energy and storage technologies, such as enhanced geothermal and 100-hour storage solutions. Ihle highlighted that hyperscale data center customers often possess the risk appetite for such innovations, which Xcel might not pursue independently. An example cited is Fervo Energy's 400-500 megawatt enhanced geothermal project in Utah, and a successful partnership with Google in Minnesota where Xcel committed to delivering significant renewable energy and storage capacity for a Google data center, with Google covering related costs and investing in grid reliability. The proposed tariff is structured to ensure that large-load customers bear all costs associated with serving them, including transmission, substations, interconnection upgrades, and new generation, preventing financial burdens on existing customers. Customers would commit to long-term contracts (15+ years) with termination charges to recover costs if they exit early. Lon Huber, Xcel's Senior Vice President, emphasized the need for new technologies to achieve the final stages of emissions reduction, where data center partnerships could be key. Will Toor, Director of the Colorado Energy Office, echoed the potential benefits for all ratepayers, provided rate structures are appropriately designed to cover incremental and fixed costs, and that data centers are strategically located.