AURORA | Colorado will receive $250 million from the U.S. Department of Energy to upgrade a key power transmission connection between Colorado and Texas, state and federal energy officials announced from Aurora yesterday.
The grant is part of a U.S. Energy Department project spending about $2 billion to try to squeeze more electricity out of the nation’s aging and stressed power grid, as President Donald Trump’s administration steps up efforts to avoid blackouts amid skyrocketing energy demand spurred by artificial intelligence data centers.
The $2 billion will go toward 31 projects across 26 states that are expected to produce more than 23 gigawatts of additional electricity capacity — enough to power 16 million homes, according to federal officials.
“This means lower costs and fewer outages for Coloradans,” Gov. Jared Polis said in a statement. “By strengthening Colorado’s electric grid and expanding our ability to share power with other regions, we can better protect families and businesses during extreme weather and periods of high demand while continuing to save people money.”
The local funding will support the Colorado-to-Texas Western-Eastern Intertie Modernization Initiative, known as CO2TX, a project state and regional energy officials say will strengthen the connection between the Western and Eastern power grids.
The nation’s electricity system is divided into large regional grids with limited ability to share power between them.
The Colorado Energy Office is partnering with Xcel Energy on the project, according to state officials. The total CO2TX project cost is $1.2 billion, with the federal government providing $250 million and Xcel providing an 80% match, according to the release.
The Colorado portion of the project will shift the main transmission connection from Lamar to a higher-capacity May Valley substation in southeast Colorado and link it directly to the Colorado Power Pathway transmission network. One terminus is in southeast Aurora at the Harvest Mile Substation.
State officials said the upgrades will vastly increase the system’s capacity to move electricity, reduce strain on the grid and improve reliability during periods of high demand and extreme weather. The project also is expected to give consumers access to electricity from a larger pool of sources.
“By strengthening Colorado’s electric grid and expanding our ability to share power with other regions, we can better protect families and businesses during extreme weather and periods of high demand while continuing to save people money,” Polis said.
The project will upgrade existing equipment and power lines rather than build entirely new transmission corridors, officials said. That approach can increase capacity while limiting construction costs and land-use impacts.
Tim Walsh, assistant secretary for environmental management at the Energy Department, said federal investment will continue to support grid and power improvements for Colorado and the broader Western United States.
Energy Department trying to squeeze more electricity from the aging power grid
The $2 billion in federal money will go toward 31 projects across 26 states that are expected to produce more than 23 gigawatts of additional electricity capacity — enough to power 16 million homes.
The projects will use new technologies such as sensors to measure real-time weather conditions to ensure safe transmission or direct power away from congested paths, the department said.
The upgrades could improve power reliability and lower electricity costs for about 100 million Americans, officials said.
“This is a quick way to lower electricity prices and increase reliability: using fibers that are already in the transmission lines to analyze what’s the temperature out, what’s the wind out, how can we use this transmission line to distribute more power, but safely and only in the right conditions,” Energy Secretary Chris Wright said in a news conference promoting the grants Thursday at a PPL Corp. facility in Allentown.
The eastern Pennsylvania electric utility says two data centers in its territory came online this year and six more are under construction, with enough other data centers in the advanced planning stages that its peak electric demand could quintuple by 2032.
PPL said it is receiving $71.5 million to modernize an existing high-voltage transmission line across roughly 30 miles in northern Pennsylvania.
The announcement comes amid warnings that AI’s voracious demand for power is threatening to overwhelm U.S. power supplies, as massive new data centers come online faster than new power plants can be built. It also comes as electricity bills rise faster than inflation in many parts of the U.S., blamed in some areas on demand from data centers.
The snowballing opposition to data centers in communities across the country has thrown a wrench into the plans of the world’s richest companies and transformed the midterm election landscape.
Trump continues to stick up for data centers, even as politicians from both major political parties criticize them and many communities try to block them.
In the meantime, Congress and some states are trying to push utilities to expand their use of new technologies to make grids more efficient and to lessen the need to build new power plants.
Julia Selker, the executive director of the WATT Coalition, a trade association for grid-enhancing technologies, said both the projects and the scale of the investment are significant. Utilities in the U.S. are lagging places like Europe in adopting the technologies, despite federal investment in the past to develop and test them, Selker said.
Still, Drew Maloney, CEO of the Edison Electric Institute, a trade association of for-profit utilities, said America’s electric utilities are making a “significant investment” every year in new technologies to strengthen the grid and reduce outages.
Wright said that work on the projects should begin right away and that he hoped some efficiencies are in place before this winter to tamp down price spikes when extreme weather sends demand skyrocketing.
Wright said he didn’t know whether the projects would have gotten done without federal funding. Many, he said, had been under consideration before the grants were offered, but the grant recipients hadn’t “quite pulled the trigger” on them.
Projects being announced Thursday will involve component enhancements on more than 1,500 miles (2,400 kilometers) of transmission lines and technological enhancements across nearly 21,000 miles (34,000 kilometers), the department said.
Projects were prioritized based on those that can be put into operation quickly, officials said. Money for the grants comes from the bipartisan infrastructure law enacted by Congress under then-President Joe Biden, a Democrat. The government’s $1.9 billion in funding will be matched by $3.35 billion from the recipients, the department said.
Recipients include utilities, cooperatives and four state agencies. The state agencies — in Colorado, Indiana, Ohio and Oklahoma — were the biggest recipients, collectively drawing $810 million, with the Colorado and Oklahoma projects promising improvements to regional grids.
Trump has vowed to “unleash” the nation’s energy sector in his second term, aiming to drive up record-setting domestic oil and gas production, strip away pollution restrictions on power plants and keep expensive coal-fired power plants operating past their retirement dates.
The administration also has pledged nearly $4 billion to buy back offshore wind leases as Trump seeks to discourage the expansion of wind energy in favor of fossil fuels.
His administration meanwhile has pushed to help tech giants build and connect data centers to power plants and high-voltage power lines and convert Cold War-era uranium enrichment plants into data center and power plant complexes.