Incorporated in 1905, Xcel Energy is one of the major regulated electric and natural gas companies in the US. Headquartered in Minnesota, it is an investor-owned energy utility with operations in eight mid-western and western states including portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. It serves more than 3.6 million electricity customers and 2 million natural gas customers through its regulated and non-regulated subsidiaries.

The strategic focus of Xcel Energy is on investing in cleaner power generation and transmission assets as well as in natural gas infrastructure. As a first step in this regard, in early 2018, it announced plans to reduce carbon emissions by 60 per cent (from 2005 levels), increase the share of renewable energy (RE) in its fleet to 55 per cent, and shut down 50 per cent of its coal capacity in the state of Colorado by 2030. 

However, at the close of 2018, by revising its earlier targets, it became the first US electricity company to announce the commitment to produce 100 per cent carbon-free electricity by 2050, while keeping service reliable and customer bills low, with an interim goal of reducing emissions by 80 per cent by 2030.  In this, it echoes California’s ambitious Senate Bill (SB) 100, which targets an increase in the state’s RE electricity portfolio from 50 per cent to 60 per cent by 2030. SB 100 establishes a further goal of having an electric grid that is powered entirely by clean energy by 2045.

To achieve its goals, Xcel energy is focusing on transforming its power grid to accommodate increased levels of renewables and distributed energy resources, while maintaining elevated reliability and security levels. To this end, the company has outlined plans to incur a capital expenditure of USD5.29 billion on power transmission in 2020-24.

Existing network

Xcel Energy is a vertically-integrated electric company that functions through its four operating companies—Northern States Power (NSP) Minnesota, NSP Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Company (SPS). 

As of December 2019, through these four subsidiaries, Xcel owned and operated infrastructure comprising 145,238 conductor kms of transmission lines ranging from the 115 kV to 500 kV voltage levels and 1,235 substations. 

During the five-year period between 2015 and 2019, the utility’s line length witnessed a compound annual growth rate (CAGR) of 4 per cent, increasing from 122,316 conductor km in 2015 to 145,238 conductor km in 2019. During 2015-19, the utility’s substations increased from 1,226 in 2015 to 1,235 in 2019.

Line length NSP MinnesotaNSP-WisconsinPSCoSPS
–500 kV4,694
–345 kV21,1355,3708,10515,395
–230 kV3,545 19,48615,746
–161 kV1,0832,931
–138 kV148
–115 kV12,9472,9218,13523,596
Table 1: Xcel Energy’s transmission network, 2019 (conductor km)
Note: The line length has been converted from conductor miles to conductor km.
NPS – Northern States Power, PSCo – Public Service Company of Colorado; SPS – Southwestern Public Service Company
Source: Xcel Energy; Global Transmission Research
Figure 1: Growth in Xcel Energy’s transmission network, by subsidiary (conductor km)
Note: The line length has been converted from conductor miles to conductor km.
NPS – Northern States Power, PSCo – Public Service Company of Colorado; SPS – Southwestern Public Service Company
Source: Xcel Energy

Financial and operational performance

In the US, regional transmission organisations (RTO) or independent system operators (ISO) are responsible for coordination, monitoring and controlling inter-state bulk power transmission, and most transmission utilities are part of one or the other organisation.  For Xcel Energy, NSP Minnesota and NSP Wisconsin are a part of the Midwest Independent System Operator (MISO) and SPS is a member of Southwest Power Pool (SPP). While, PSCo is not presently a member of an RTO and does not operate within an RTO energy market. However, PSCo does make certain sales to other RTO’s, including SPP and participates in a joint dispatch agreement with neighboring utilities.

As of December 2019, Xcel energy revenues stood at USD11.53 billion, witnessing a marginal decline from its 2018 revenues of USD11.54 billion. In 2019, of the total revenues of USD11.53 billion, nearly 83 per cent or USD9.56 billion were earned from the utility’s electricity segment. 

The utility witnessed a marginal decline in its income before financing charges and income taxes, from USD2,001 million in 2015 to USD1,500 million in 2019. The utility’s net income witnessed a notable CAGR of 8.7 per cent, increasing from USD984 million in 2015 to USD1.37 billion in 2019. 

–Electric revenue9,2769,5009,6769,7199,575
Income before financing charges and income taxes2,0011,7041,6901,4421,500
Net income9841,1231,1481,2611,372
Capital expenditure3,6833,060*3,655*4,200*4,130*
Operating expenditure9,0248,8679,1819,5729,425
Return on equity (%)9.310.210.010.310.4
Profit margin (%)8.910.110.110.911.9
Operating expense ratio0.
Table 2: Key financial indicators for Xcel Energy (USD million)
Note: Financial figures are for the company’s entire business operations and not specific to transmission unless mentioned specifically; * Based on capital expenditure forecast
Source: Xcel Energy; Global Transmission Research

On the operational performance front, Xcel Energy distributed 116.3 TWh of electricity in 2019 as compared to 104.3 TWh in 2015. In 2019, the system peak demand for NSP was 8,774 MW, 7,111 MW for PSCo, and 4,261 MW for SPS. 

Annual distributed electricity (TWh)104.3108.0107.1115.8116.3
System peak demand (MW)     
Table 3: Key operation indicators for Xcel Energy
Note: NSP – Northern States Power Company; PSCo – Public Services Company of Colorado; SPS – Southwestern Public Service Company
Source: Xcel Energy; Global Transmission Research 

Key initiatives

Focus on RE, especially wind

For more than a decade, Xcel Energy has made significant developments on the renewable front. Xcel Energy’s RE portfolio encompasses wind, hydroelectric, biomass and solar power from both owned generating facilities and power purchase agreements (PPAs). 

As part of its wind investment plan, which is also the nation’s largest multi-state wind investment plan, Xcel plans to increase its wind capacity by 70 per cent by 2022 under its ‘Steel for Fuel’ strategy. It seeks to capitalise on declining wind and solar costs and available tax credits to increase RE ownership, decrease and hedge fuel expenditures, diversify its generation portfolio, and reduce carbon regulatory risk.

In absolute terms, Xcel Energy expects to have more than 11,000 MW of total wind capacity by 2021. Presently, it is working to add 4,700 MW of wind energy to its system by 2021, including 3,500 MW of owned wind and 1,200 MW of PPAs. Of the 3,500 MW of owned wind, 1,300 MW is presently in service and 2,200 MW is under development or construction.  During the 10-year period spanning 2009-19, Xcel energy witnessed a twentyfold increase in its wind ownership portfolio, growing from merely 124 MW in 2009 to 2,121 MW in 2019. 

Xcel Energy’s Upper Midwest Energy Plan proposal to the Minnesota Public Utilities Commission (PUC) includes the addition of approximately 5,000 MW of solar energy by the early 2030s, 275 MW of battery storage and a potential 10-year extension of its Monticello nuclear generating station. It also includes the retirement of multiple coal units totalling approximately 2,000 MW. 

Advanced grid initiatives 

Xcel Energy is also actively engaging in new demonstration and smart grid and technology initiatives. The utility is leveraging smart grid and technology solutions to modernise its power grid. Over the next five years, Xcel Energy plans to incur investments worth USD1.4 billion to implement new network infrastructure, smart meters, advanced software, equipment sensors and related data analytics capabilities.

Xcel Energy is undertaking foundational work to modernise the grid in Colorado and Minnesota. In 2019, Xcel Energy effectuated foundational software and completed its initial smart meter deployment in Colorado, with full-scale implementation to follow. The utility has also requested approval from the Minnesota PUC to expand its advanced grid programme in Minnesota, a decision on which is expected in late 2020. Moreover, Xcel Energy plans to deploy smart meters across its Colorado and Minnesota service territories by the end of 2024. 

Transforming transmission inspections

In January 2020, Xcel Energy, Boston-based eSmart Systems and Colorado-based EDM International announced the first phase of a strategic initiative to deploy artificial intelligence (AI)-based collaborative intelligence for 3,300 miles (5,313 km) of Xcel’s transmission lines to dramatically improve inspection processes with the goals of improving asset information, reducing operational costs, decreasing failure rates and extending asset life. This project will significantly improve the speed, safety, accuracy and cost of power grid inspections and deliver value by updating information on critical infrastructure assets. 

Focus on pushing electric vehicle (EV) adoption

With a growing focus on climate and clean energy goals, Xcel Energy plans to make significant progress in the adoption of EVs in its service territories. For that, Xcel is investing in low-carbon transportation through a portfolio of innovative initiatives and pilot programmes that focus on expanding access to EV charging systems and integrating EVs into municipal fleet operations. 

Recently, in May 2020, Xcel Energy released its first transportation electrification plan for Colorado in alignment with Colorado’s goal of 940,000 EVs on the roads by 2030.

Capital expenditure plans

Xcel Energy continues to invest substantially in its utility assets to provide reliable services to its customers and effectively meet rising electricity demand.  Over the next five years (2020-24), Xcel Energy plans to make up to USD21.97 billion in investments in its energy and natural gas infrastructure. Of this, the transmission segment will account for a 24 per cent share, or USD5.29 billion in capital expenditure for the period 2020-24. For 2020, the company has an annual transmission capex outlay of USD625 million, which increases to USD1,260 million in 2024.

Figure 2: Planned capital expenditure, 2020–24
Source: Xcel Energy

In the longer run, Xcel Energy plans to make investments worth USD15-20 billion in transmission assets between 2025 and 2035.  The plan will enable more RE assets to be built in the regions where its four subsidiaries operate as well as facilitate the replacement of ageing and less efficient grid assets. 

Future network expansion projects

In the past, Xcel Energy has initiated several transmission projects within its own territories of operations as well as been a part of key inter-regional projects in partnership with other utilities. 

One of the major upcoming projects includes the USD242 million Tuco–Yoakum–Hobbs line project in New Mexico and Texas. The 168-mile (270-km), 345 kV line will complement the supply of power at a lower customer cost in the region. It is a part of the New Mexico–Texas power transmission project and includes the construction of a 345 kV line from Hobbs substation in Lea County, New Mexico, to the Yoakum County substation in Texas, and the upgrade of the existing Hobbs (New Mexico) and Yoakum (Texas) substations. This project is part of Xcel Energy’s USD3 billion ‘Power for the Plains’ project—a grid enhancement initiative that aims to deliver reliable and abundant electricity in New Mexico, Oklahoma and Texas.

Another important project is the 345 kV Huntley–Wilmarth transmission project, which is being developed by Xcel Energy and ITC Midwest LLC. The project will reduce congestion in the transmission grid in southern Minnesota and northern Iowa, which is inhibiting low-cost electricity from generation facilities, including wind farms in the area, from reaching customers. It entails the construction of a 40- to 50-mile (64- to 81-km), 345 kV line connecting Xcel Energy’s Wilmarth substation located north of Mankato, with ITC’s Huntley substation located south of Winnebago. The project has an expected in-service date of end-2021.

Some of the other projects include the 345 kV Lamar–Front Range project and the 345 kV Shortgrass–Cheyenne Ridge line project. The 300- to 350-mile (483- to 563-km), 345 kV Lamar–Front Range project in southeast Colorado is proposed by Tri‐State Generation and Transmission Association, and Xcel Energy subsidiary PSCo. It aims to deliver an estimated 2,000 MW of new generation from energy resources near Lamar and Burlington to load centres along the Front Range. The studies on the project have been completed. However, currently, there are no plans to build the project.  

The 345 kV Shortgrass–Cheyenne Ridge line project consists of an approximately 73-mile (117-km), 345 kV line, which will extend from the Shortgrass switching station to the Cheyenne Ridge wind farm collector stations. The Shortgrass switching station, besides providing an interconnection for part of the Rush Creek wind generation, will also interconnect the 300 MW Bronco Plains wind project and the 500 MW Cheyenne Ridge wind project. The project has been granted a certificate of public convenience and necessity (CPCN) and is estimated to cost approximately USD52.7 million. Its scheduled year of commissioning is 2020. 

ProjectVoltage (kV)Line length (km)Expected completion
Shortgrass–Cheyenne Ridge line3451172020
TUCO–Yoakum–Hobbs line3452702020
Eddy County–Kiowa line345552020
Huntley–Wilmarth transmission project345802021
San Luis Valley–Poncha #2 transmission project2301002022
Parachute–Cameo line230502023
Weld County transmission expansion project23041TBD
Lamar–Front Range project345483-563TBD
Weld–Rosedale transmission project23032TBD
Table 4: Key planned projects
Note: TBD – to be decided; line length in kms is converted from miles.
Source: Xcel Energy; Global Transmission Research

The way forward

Xcel Energy has successfully carved a niche for itself in the RE segment by being the first US electricity company to announce its commitment to produce 100 per cent carbon-free electricity by 2050. So far, Xcel energy is well positioned to achieve its 2030 target of reducing 80 per cent emissions by 2030 as in 2019 alone, the company was able to reduce its carbon emissions by 44 per cent from 2005 levels, reporting its largest-ever single-year drop. 

In the future, Xcel Energy is expected to continue making key investments to diversify its energy portfolio and in advanced grid network technologies to ensure reliable and affordable access to power, while simultaneously keeping pace with the growing power demand in the country.  

The article has been sourced from Global Transmission