This story was produced as part of the Colorado Capitol News Alliance. It first appeared at cpr.org.
The Department of Energy announced Thursday that it plans to award the Colorado Energy Office and Xcel Energy $250 million to strengthen the electricity grid and potentially lower power costs.
The award, which will take months to finalize, will help complete a massive, $1.2 billion set of investments to improve a multistate transmission “highway.” It’s called the Colorado-to-Texas Western-Eastern Interior Modernization Initiative (CO2TX).
The Xcel project aims to update and add high-voltage transmission lines, which move electricity across vast distances, and substations, which transform the power between different grids.
Xcel is expecting a huge increase in electricity demand in the 2030s, from large customers like data centers, and efforts to electrify homes and use more electric vehicles. The company is planning to spend billions to upgrade some of its aging power lines, which are a huge driver in rising energy bills.
Currently, the Colorado grid is barely linked to the grids that carry electricity from Texas and eastern states, according to Will Toor, head of the Colorado Energy Office. That means that if there’s a glut of renewable energy in one state, only a limited amount can flow to Colorado.
Xcel’s project will route electricity through a newer, more modern substation that can handle more power. The project will also replace older transmission lines with new, higher-capacity ones.
Those investments will dramatically ratchet up the amount of electricity that can move into Colorado from those other grids — increasing it from 210 Megawatts (MW) to 700 MW, with the potential to carry nearly 2,000 MW of electricity, Gov. Jared Polis told CPR News.
That will allow Coloradans to access more electricity, including renewables, without spending as much money to build new power plants or tear down existing transmission towers. Polis, who announced the award at the Arapahoe County Fairgrounds on Thursday, also said it would make the grid more resilient.
“[The project] will help increase reliability, decrease costs for Colorado consumers, and allow a higher percentage of renewable energy to be on the grid,” Polis said.
In a press release, the DOE said it intends to award $1.9 billion in federal funds to 31 grid-improvement projects across 26 states. Colorado’s award is one of the largest.
Colorado’s project will connect into Xcel’s Power Pathway network, a $1.7 billion investment in transmission to bring cheaper wind and solar power from the Eastern Plains to the populated Front Range.
But parts of the Power Pathway have hit hurdles; a Cheyenne County district judge ruled in June that Xcel couldn’t condemn a small section of farmland to connect wind projects to the network.
Xcel has appealed that ruling to the Colorado Court of Appeals. Robert S. Kenney, president of Xcel’s Colorado subsidiary, declined to comment about the ongoing litigation in an interview with CPR News about the funding announcement.
DOE celebrates award, but cancelled other electricity and clean energy awards
The federal money comes from the Biden-era 2021 Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law. The massive legislation allocated billions towards projects that strengthened the electricity grid or improved access to clean energy.
DOE officials celebrated Thursday’s announcement as “commonsense energy” policy which will help the Trump administration meet its goal of “unleashing American energy.”
“These investments will get more out of the infrastructure we already have, move more electricity across the grid, and help deliver affordable, reliable, and secure power that will fuel American prosperity for decades to come,” said Energy Secretary Chris Wright in a statement.
But since 2025, the DOE has cancelled or delayed previous projects that aimed to increase the resilience of the grid, which were awarded under President Biden and funded by the same law, according to a report from former DOE staffers and Canary Media.
Last year, the DOE cancelled at least 34 energy grants in Colorado, worth hundreds of millions of dollars. Some of those projects aimed to keep electricity prices affordable.
In a court filing, the agency later admitted that it cancelled the funding solely for political reasons in states that did not vote for President Trump during the 2024 election.
Polis said state officials believed that this new funding would not be revoked, and that efforts to increase grid reliability and transmission are now “solidly bipartisan.” He added that his office “would work with anybody” on programs and policies to benefit Coloradans.
Kenney, Xcel’s president, said he expects the transmission project to be completed and online by around 2030.
