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The state is “tapping private investment and competitive market forces to deliver new grid capacity,” writes Common Charge Executive Director Mary Rafferty.
Mary Rafferty is the executive director of Common Charge, a coalition of nonprofits, businesses and consumers that advocates for more affordable and distributed energy.
At a time when many states are scrambling to find solutions to provide affordable energy amidst rising demand and electricity prices, Colorado is leading the way in solutions, including creating pathways to deploy distributed solar and storage resources. The state is prioritizing these distributed energy resources for their ability to be constructed and connected on faster timelines while providing affordable, dependable grid capacity.
Like states across the country, Colorado is facing rising bills and increasing energy demand. The average energy bill in Colorado has grown more than 27% in the last five years. At the same time, energy demand in the state is expected to surge 57% over the next two decades. Community scale solar and battery storage are a cornerstone of Colorado’s solution – solving the energy needs of individual communities now through an innovative, new dispatchable distribution program.
Dispatchable distributed energy works by co-locating midscale batteries and solar, turning them into an around-the-clock solution, storing energy when the sun is up and releasing it when it’s needed most. This is particularly useful for managing local energy demand spikes with right-sized solutions. The mid-scale size of these projects (typically 1-5 MWs) enables them to be built closer to communities and plugged directly into the local distribution grid, avoiding costly transmission build out and allowing projects to be built closer to where the grid is most congested.
Last year, the Colorado Public Utilities Commission approved a new Dispatchable Distributed Generation program (DDG) requiring the state’s larger investor-owned utilities — mainly Xcel Energy — to buy at least 50 megawatts a year of community scale solar co-located with mid-scale batteries in 2026 and 2027. Just a few weeks ago, Xcel Energy issued the nation’s first competitive solicitation under the program.
The truly unique aspect of this program is that it’s built on a competitive procurement process that evaluates projects based on the value they provide to the electric system. Rather than making decisions based on generation cost alone, utilities will factor a resource’s geographical benefits and its overall impact on the grid.
Here’s how it works: Xcel identifies where additional capacity will provide the greatest value through its resource planning process, and developers submit project proposals that meet those needs with dispatchable resources. Projects that directly match needs are selected to provide affordable electrons to areas that require them, with regulators overseeing a fair process that evaluates the impact to the grid and customer value.
By leveraging each participant’s strength, distributed solar and storage can provide flexibility, fill near-term capacity gaps, and reduce peak demand pressures, while larger infrastructure projects continue to move forward to support future energy growth.
In addition, by opening the market to competitive providers of solar, storage, and other distributed energy resources, the state is tapping private investment and competitive market forces to deliver new grid capacity years faster and at a lower cost to customers than utility-owned infrastructure alone can provide.
Perhaps the program’s greatest strength, however, is that it was built with speed in mind. Utilities and communities facing resource constraints cannot afford to spend years waiting for frameworks to develop to drive deployment. DDG tackles that issue head-on, removing barriers that slow projects, including interconnection timelines.
The program was crafted by an unusually broad coalition of stakeholders, including Xcel Energy, the Colorado Energy Office, consumer advocates, environmental organizations and solar and storage developers. The process produced a realistic program that balances the needs of communities with the operational and market realities of utilities and developers.
While not all states will replicate Colorado’s program, the principles they were built on should serve as a guide to develop their own frameworks.
The timing could not be more important. In most states across the country, customers are seeing energy costs increase while grid operators are trying to manage significant growth in demand. While regulators and utilities grapple with trying to address these daunting challenges through traditional mechanisms, a critical piece of the puzzle lies before them.
Colorado has provided the blueprint. It’s time for states to build for their communities and local economies. And distributed energy resources are powerful tools ready to be taken out of the kit.
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“There is no debate that voltage and frequency excursions on the transmission network create reliability concerns, which increase with the interconnection of each new large computational load,” wrote a PUC staffer.
Utility associations supported the 2024 efficiency requirements for distribution transformers and oppose their repeal. The rule may threaten national security, DOE says.
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“There is no debate that voltage and frequency excursions on the transmission network create reliability concerns, which increase with the interconnection of each new large computational load,” wrote a PUC staffer.
Utility associations supported the 2024 efficiency requirements for distribution transformers and oppose their repeal. The rule may threaten national security, DOE says.
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