Colorado to get $250M in federal funding for electricity grid improvements

The Colorado Energy Office will receive $250 million from the federal government to improve electricity transmission links between Eastern and Western grids, the U.S. Department of Energy announced Thursday. It’s part of $1.9 billion total to help fund 31 grid-improvement projects.

“This means lower costs and fewer outages for Coloradans,” Colorado Gov. Jared Polis, a Democrat, said in a statement. “By strengthening Colorado’s electric grid and expanding our ability to share power with other regions, we can better protect families and businesses during extreme weather and periods of high demand while continuing to save people money.”

Colorado and Oklahoma will get the most federal funds, both at $250 million. Some projects, including those in Alabama and Mississippi, are aimed at increasing capacity for large-load data centers, and in total, the 31 projects will add 23 gigawatts of capacity to the country’s transmission system.

Colorado’s project will “expand interregional transfer capability, improve system reliability, enhance operational flexibility, and strengthen grid resilience across Colorado, Texas, and neighboring regions,” according to a DOE summary.

The project will move a transmission connection between Colorado and Texas to the higher capacity May Valley substation in southeastern Colorado. Higher voltage wires will more than triple the amount of electricity that can move between the two regional grids, from 210 megawatts to 700 megawatts. It could one day carry 2,000 megawatts of electricity.

It is part of a larger set of investments to improve the multi-state transmission system, known as the Colorado-to-Texas Western-Eastern Interior Modernization Initiative, or CO2TX.

“Xcel Energy Services Inc’s proposed project will allow optimized use of clean energy resources across a much larger geographical footprint which will save Coloradans money on energy costs,” Will Toor, executive director of the Energy Office, said in a statement.

Because the project involves modernizing existing equipment and lines, it is in line with a March executive order from President Donald Trump that seeks to maximize existing right-of-ways instead of new construction.

“Modernizing the Lamar Tie will strengthen the connection between the Western and Eastern electric grids, helping us better serve customers during extreme weather, meet growing energy needs and make the most of affordable energy resources across the region,” Robert Kenney, president of Xcel Energy–Colorado, said in a statement.

The money was made available through the Infrastructure Investment and Jobs Act of 2021. Xcel is contributing an 80% funding match for the project.

In July, Polis and other Western governors started a task force to prioritize upgrades for the region’s energy grid.