Colorado’s grid expansion could mean billions in growth

By Kelly Caufield

Colorado’s economic engine should not throttle itself. This is the choice being put to the Colorado Public Utilities Commission.

Colorado’s economic and demographic situation looks much different in 2025 compared to ten years ago when it was at the top of national rankings for migration gain and economic development.  

In order to attract the best in new tech development and new economic base, Colorado needs more energy. This is relevant to all industry types, from manufacturing to construction to new technologies. This last item is particularly relevant as states chase a whole new class of AI- and quantum computing-related data centers. Not only do these data centers require land and capital outlay, but new levels of electrical generation. As the U.S. information economy relies on AI more and more, power generation will need to amplify.

Colorado’s business community is reading this situation and asking for an investment. Developers across the state, from advanced manufacturers and AI data centers to affordable housing projects, have collectively requested around 5,000 megawatts of new electric load capacity across Xcel Energy’s service territory through 2031. The Colorado Public Utilities Commission (PUC), however, signaled it may approve only 200 to 600 megawatts.

An artificial ceiling on Colorado’s grid capacity would be a critical decision. Domestic business development cannot commit to new plans without guaranteed energy access. What’s more, would-be Colorado businesses will be less likely to relocate to the Centennial State without it. Colorado’s former economic development hinged largely on attracting high-value, new economy businesses to the state.

According to the Common Sense Institute’s modeling, this grid capacity expansion would be an economic multiplier. If capacity were limited to 200 megawatts, Colorado would lose out on 17,800 jobs and slow population growth by more than 20,000 people through 2031. Altogether, the state would forfeit $21.8 billion in GDP, $36.7 billion in total output, and $12.5 billion in personal income over six years. 

Every 1,000 megawatts of new capacity represents roughly $1.5 billion in investment. If the PUC approves only 200 megawatts instead of 5,000, Colorado forfeits $7.2 billion in direct spending and the billions more that ripple through the broader economy.

Colorado’s attraction to the rest of the nation was self-evident in the mid-2010s. That is no longer the case. In order to recapture the same kind of economic growth that made it the “It State” in 2015, its leaders will position the state best by firmly telegraphing their intention to operate a friendly, expansive business environment.

 Kelly Caufield is the Executive Director of the Common Sense Institute.

_{*The opinions expressed in this column are those of the author and do not necessarily reflect the views of EnergyPlatform.News.}