Xcel Energy says the economic recession and the slowdown in the oil and gas sector are dramatically cutting Colorado’s demand for power.
That could mean fewer solar, wind and natural-gas plants in the future and a setback for the state’s nascent new-energy economy.
Xcel on Thursday told regulators it expects demand for power to grow at a significantly slower pace, forcing it to seek bids for only 1,800 megawatts of new power plants to come online by 2015.
That’s 400 megawatts down from the previous forecast of Dec. 1, 2008. The reduced demand is equivalent to the amount of power used by about 400,000 homes.
Xcel will accept competitive bids from wind energy, concentrating solar power and natural-gas power producers, the utility said in its filing with the Colorado Public Utilities Commission.
Wind and solar companies criticized Xcel’s decision to pit them against natural gas for a smaller power requirement, given the fuel’s plummeting price in recent months, which could make it more competitive than renewables.
“This is possibly imposing an unfair situation,” said Craig Cox of Interwest Energy Alliance, a Denver group that lobbies for the wind industry.
“When wind is competing against gas, I’d argue, rhetorically, ‘What is the price of gas going to be in 10 years?’ ” he said. “But at the end it would depend on Xcel and what the market decides to do.”
Karen Hyde, Xcel’s vice president of rates and regulatory affairs, said competition among different power sources is now tougher.
“It is not our intent for wind or solar to be on the chopping block,” she said. “We haven’t changed our commitment to wind or solar — but it depends on the bidders to submit the most cost-competitive bids.”
Even natural-gas-fired power producers are not happy with the lower power requirement.
“It was very disappointing,” said Nick Muller of the Colorado Independent Energy Association.
“Independent power producers are really competitive, and I am hoping they will have a good crack at the megawatts,” he said. “We are committed to renewables, but we need gas to pick up the slack when the wind doesn’t blow or the sun doesn’t shine.”
Bids due April 10
Xcel on Dec. 1 had said it would accept bids for 700 megawatts of wind, up to 600 megawatts of concentrating solar power and the rest from independent natural-gas power producers for a total of 2,200 megawatts. It has already put out to bid a separate 150 megawatts for wind.
Xcel now says wind and gas need to compete for 1,600 megawatts, with the remaining 200 megawatts earmarked for concentrating solar power.
The deadline for bids is April 10. Xcel will select the winning bids in summer, and the utilities commission will review the decision later this year.
Xcel spokesman Mark Stutz said, “We can’t guarantee we will get 700 megawatts of wind, but that’s our preference.
“Please remember that, as always, if other factors that have always existed in the bidding process — such as not getting (enough) wind bids or prices that are not competitive enough — we may not get to 700 megawatts of wind.”
Hurting Colorado?
Xcel’s decision could be a temporary setback for Colorado’s new-energy economy, but it won’t cause a long-term slowdown, said Tom Clark, executive vice president of the Metro Denver Economic Development Corp.
“It could very well give people some pause and take a watchful eye to which way the market will move,” he said. “We have not seen any abatement in interest among wind and solar companies looking to move here, but many are global, and they are playing a long game.”
Tom Plant, director of the Governor’s Energy Office, said Colorado’s law requiring utilities to get 20 percent of their power from renewables by 2020 will continue to boost the new-energy economy.
“I don’t think it’s a setback,” Plant said. “In a way, it’s good news if the utility has their demand reduced, for we are trying to become more energy-efficient and reduce energy use.”
Both Clark and Plant said President Barack Obama’s economic-stimulus package has plenty of provisions to boost investment in renewables and infrastructure such as transmission lines.
Getting a fair shake
All potential bidders said they expect the utilities commission to make an equitable decision.
“My main concern is, we expect the Public Utilities Commission to make the decision based on competition and price,” Muller said.
Tanuj Deora, project manager at Horizon Wind Energy, also placed his faith on the commission. His company has developed 2,000 megawatts of wind farms across the nation and plans to submit a bid to Xcel before the deadline.
“Wind and gas are not competing technologies; they are complementary technologies,” Deora said. “Today, wind is a mainstream technology, and as long as there are concerns for climate change, wind industry won’t go away.”
Gargi Chakrabarty: 303-954-2976 or gchakrabarty@denverpost.com
