close
close
quic3f

Xcel Energy unveils a $45 billion capital plan as its data center pipeline approaches 9 GW

This audio is generated automatically. Please let us know if you have any feedback.

Dive short:

  • Xcel Energy plans to invest $45 billion in new generation, transmission and other projects over the next five years, President and CEO Bob Frenzel said Thursday during the company’s third-quarter earnings call.

  • The company has received 8,900 MW of requests from data center companies, but according to the company’s earnings presentation, economic growth is only 22% of total five-year expenditure.

  • Xcel expects to secure only 25% of the projects in its data center pipeline over the next five years, leaving room for further growth that could continue into the next decade, Frenzel said.

Diving insight:

Strong load growth across the country suggests utilities need to move much faster than in the past, Frenzel told investors Thursday.

“What you’re seeing … is obviously high demand across the country,” he said. “And we know that many people’s incoming requests are being double-counted as these large loads look for transmission and generation services. But it highlights another need, which is that we as a country, we as an industry, need to accelerate our ability to develop both transmission and generation to serve the load that we think is coming.

For Xcel, that acceleration will take the form of a $45 billion plan over the next five years that focuses on four key areas: clean energy, customer electrification, load growth and reliability, Frenzel said. According to the company’s presentation, transmission and distribution upgrades will account for 63% of total financing. Sustainable energy projects and new generation projects will receive 11% and 10% respectively.

Although deals with fast-growing tech companies like Meta, QTS and Microsoft make headlines, data centers represent only half of the company’s projected revenue growth in the coming years, said Brian Van Abel, executive vice president and chief financial officer of Xcel. The company has also experienced significant growth due to the electrification of oil and gas production in the Permian Basin and increased adoption of electric vehicles and other consumer products in Colorado, he said.

But this growth only powers part of the company’s investment plan, according to Thursday’s presentation. Improvements in transmission and distribution resilience will account for 29% of planned investments, while carbon-free generation and generation reliability will claim 14% and 6% respectively. Rising wildfire costs will eat up 11% of the plan, with Van Able noting the company’s insurance premiums have tripled this year.

Van Abel said Xcel is pursuing a pipeline of potential investments beyond the $45 billion plan announced Thursday, which could amount to an additional $10 billion — a figure he said is “conservative and could be significantly higher.” The capital investment plan does not include the 4.2 GW Upper Midwest Energy Plan, a resource plan from Southwestern Public Service Co., announced earlier this month. which targets 4 GW to 10 GW of new generation, or the resource plan up to 14 GW that Xcel has submitted. in Colorado in mid-October, according to company documents.

The increased development shows lower unit electricity costs for most customers, according to Frenzel, although he noted that it is necessary to ensure that contracts with large customers such as data centers carried out in a manner that does not increase rates for other customers.

“If the country has high charge factor customers, such as those with EVs that charge overnight with other high-intensity energy loads, I think this is an opportunity for us to mitigate cost increases across the country as we transition to both our transmission – and generational footprint for the next generation,” he said. “It’s an opportunity that we have to act on very quickly – and in collaboration with a lot of people, and some new people at the table – but I’m excited about it.”

Related Articles

Back to top button