Colorado Leads the Way in Community Power Integration
Colorado's innovative approach to integrating community power has provided a blueprint for other states to follow, prioritizing distributed solar and storage resources to address rising energy demand and costs.
Colorado has emerged as a leader in the integration of community power, providing a model for other states to follow in addressing the challenges of rising energy demand and costs. The state's approach prioritizes distributed solar and storage resources, which can be constructed and connected on faster timelines while providing affordable and dependable grid capacity.
Like many states across the country, Colorado is facing rising energy bills and increasing demand. The average energy bill in Colorado has grown more than 27% in the last five years, and energy demand is expected to surge 57% over the next two decades. To address this challenge, Colorado is turning to community scale solar and battery storage, which are a cornerstone of the state's solution.
Dispatchable distributed energy works by co-locating mid-scale batteries and solar, turning them into an around-the-clock solution that stores energy when the sun is up and releases it when it's needed most. This approach 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.
The Colorado Public Utilities Commission has approved a new Dispatchable Distributed Generation program (DDG) that requires the state's larger investor-owned utilities to buy at least 50 megawatts a year of community scale solar co-located with mid-scale batteries in 2026 and 2027. Xcel Energy has issued the nation's first competitive solicitation under the program, which evaluates projects based on the value they provide to the electric system.
The program's competitive procurement process is a key aspect of its success. Utilities identify where additional capacity will provide the greatest value through their 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. The program also opens the market to competitive providers of solar, storage, and other distributed energy resources, 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.
The program's greatest strength is its focus on speed. 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 it was built on should serve as a guide to develop their own frameworks. These principles include recognizing dispatchable distributed resources as legitimate capacity assets, allowing them to compete based on the measurable value they provide to the electric system, and ensuring that competition and planning work in concert.
The timing of this approach 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, and it's time for states to build for their communities and local economies. Distributed energy resources are powerful tools ready to be taken out of the kit.
Source: Utility Dive