When a utility’s territory spreads across eight states whose boundaries include the country’s northern and southern borders, what could those far-flung jurisdictions possibly have in common?
In Xcel Energy territory, a pioneering commitment to sustainability and renewable power, for one. For another, an equally fervent devotion to sustainable economic development relationships and momentum.
In a global business environment where environmental goals have become a high-ranking priority, those two promises can be mutually inclusive: Companies with ESG high on their list are high on suppliers and vendors who feel the same.
Xcel Energy was the first U.S. energy provider to set aggressive goals to reduce carbon emissions from the most significant ways customers use energy: for electricity, heating and transportation. In 2018, the company set a goal to provide customers with 100% carbon-free electricity by 2050 and reduce carbon emissions from its operations by 80% from 2005 levels by 2030.
It’s ahead of schedule: In 2022, carbon-free energy represented 53% of the company’s power generation mix, compared to an average of 41% nationwide. That’s helped by a strong and deep roster of renewable power installations right where Xcel and its customers need them.
How did the utility perform in cultivating economic development? Xcel’s team, incentives and programs helped attract 3,000 jobs and $2 billion in investment in 2022. Since announcing its carbon-free goals in 2018, Xcel Energy territory has attracted $5 billion in capex and over 15,000 newly created jobs.
Those are heady numbers. But are they really connected? You bet they are.
“I don’t think there are many utilities [that] can do this clean energy transition at the price point that we can because of the solar and wind resources in our backyard,” Brian Van Abel, Xcel Energy executive vice president and CFO, said during the company’s April 27, 2023, first-quarter earnings call. “And we think that’s a true competitive advantage over the longer term, being able to deliver 80% to 85% clean energy in 2030 at or below inflation.”
“These are areas where we’re finding solutions for customers,” says Xcel Energy Senior Director of Corporate Economic Development Tom Bailey. “As we meet with customers, we ask where they want to take their energy strategy.”
Photo by Josh Bauer / Bryan Bechtold courtesy of NREL
“Xcel Energy is a leader in carbon-free energy delivery,” says Xcel Energy Corporate Economic Development Manager Marie Pflipsen. “With our initiatives, we look forward to partnering with our customers and new business prospects on ways to achieve sustainability goals together.”
Helping Data Centers Xcel
Data center operators — always cognizant of their energy efficiency and sustainability profiles — certainly are sitting up and taking notice. Xcel’s programs and legislation such as new data center incentives in the utility’s corporate home of Minnesota and in Wisconsin further sharpen those companies’ interest.
“We’re probably working on 10 projects now” in the data center space, says Bailey.
Xcel Energy Corporate Economic Development Analyst Jake Andre notes a “flurry of data center type inquiries” to Xcel’s corporate headquarters home of Minnesota and highlights “our robust transmission infrastructure and capacity, Minnesota state data center tax exemptions and our limited exposure to natural disasters, which ensures 24/7/365 operations.”
Those data centers are coming to Xcel’s Colorado territory too.
QTS Data Centers, the Kansas-based company with more than 9 million sq. ft. of QTS Mega Data Centers throughout North America and Europe, is developing the first mega data center in Colorado in the City of Aurora in Arapahoe County. The project’s three-building data center campus will service the data storage needs of the local market. Xcel delivered distribution service in Q2 2023 to support construction of their first data center building, currently under construction. In partnership with QTS, Xcel Energy submitted a Nonstandard Economic Development Rate (EDR) Contract Filing for QTS’ project to the Colorado Public Utilities Commission.
“This was a nationally competitive project and Xcel’s EDR was crucial to QTS’s decision to locate in our service area,” says Xcel Energy Corporate Economic Development Manager Stephanie Henley. “Pending Commission approval, the project will utilize Xcel’s EDR Tariff for a 10-year period starting when the facility takes transmission service at the end of 2024. This will be Xcel’s first Nonstandard EDR submission and is a result of successful legislation which allowed for a tariff offering.”
Different Places, Same Growth Mindset
In addition to its programs, Xcel plays the part of convenor when it comes to site selection.
“The Xcel Energy team approaches site visits as leaders throughout the process,” Jake Andre adds. “Our team organizes presentation materials, transportation coordination and agenda creation on behalf of state and local entities. This takes pressure off the local economic development organizations so they can focus on their key talking points related to the project. It also provides a clear and cohesive experience for site selectors.”
“Our Economic Development department builds relationships to foster trust, communication and collaboration,” says Xcel Energy Business Recruitment Executive Judy Ring. “It’s all about the relationships.
Among other recent Xcel Economic Development project successes:
Ascent Aviation has established a new facility at Roswell International Air Center in New Mexico that will serve as a major hub for airline maintenance, repair, storage, reclamation and fueling and create 360 new jobs.
Umoja Biopharma Inc, a Seattle-based developer of cancer therapies, is setting up a 146,000-sq.-ft. facility at the Colorado Technology Center in Louisville, Colorado, that is anticipated to involve as much as $70 million in investment over the next five years and create around 100 jobs.
At a new distribution center in Woodbury, Minnesota, Amazon enrolled in Xcel Energy’s Energy Efficiency Building Program, which is expected to result in around 4.6 GWh of savings.
In the same community where QTS is setting up shop, food service distributor Shamrock Foods has built a 1.3 million-sq.-ft. distribution center and regional HQ at Xcel Energy’s Majestic CommerCenter certified site in Aurora, Colorado.
Carbon-Free Energy Represented 53% of Xcel Energy’s Generated Power in 2022
Also in Aurora, vertical farm operator Kalera has opened its fifth vertical-grown-greens facility in an Xcel Energy Ready Building at Gateway 23.
German sensor manufacturer SICK is developing a $100 million technology campus in Bloomington, Minnesota, where it intends to consolidate all its U.S. operations.
Caviness Beef Packers is opening a facility in Randall County, Texas, just outside of Amarillo, that could employ up to 200 people. It’s one of several projects in South Georgia Business Park — enough to convince Xcel to complete in August a $7.6 million substation upgrade and new power line project to meet the growing demand. Xcel has made several such investments as the region surges.
“Low electricity rates and high reliability are big draws for companies choosing to relocate or expand in Amarillo. The investments Xcel Energy has made in substation and distribution infrastructure have been critical to our efforts to attract 3,000 new jobs and over $2 billion in capital investment over the past two years,” said Kevin Carter, president and CEO of the Amarillo Economic Development Corp., whose group’s success earned it a 2023 Mac Conway Award for Excellence in Economic Development from Site Selection.
Thinking Ahead
Data centers are hot. So are semiconductors, electric vehicles, batteries, hydrogen and the supply chains that serve them.
As a board member of the Greater MSP Partnership, the economic development partnership for the 15-county Minneapolis Saint Paul region, Xcel is firmly behind the Minnesota CHIPS Coalition, formed by Greater MSP in late 2022 after the passing of the $52 billion federal CHIPS and Science Act. The coalition of more than 35 manufacturers, supply-chain partners, education and training providers, labor organizations, and governments aims to do nothing less than become a national semiconductor hub by doubling the industry’s size in the region and creating 10,000 new jobs.
Among the region’s qualifications are a robust talent and company base (the expanding Polar Semiconductor, among others), R&D at the University of Minnesota and other institutions and the ability to produce semiconductors with 100% renewable energy — something Xcel knows a little about.
Xcel’s own climate goals include massive new solar installations and other clean energy and power storage investments at coal-fired power plant sites. Near one of the largest solar developments in the nation at the Sherburne County Generating Station in Becker, Minnesota, Xcel has partnered with Massachusetts-based Form Energy to construct a demonstration-scale, 10 megawatt/1,000 megawatt-hour iron-air battery system. The project is one of two battery storage projects to be installed at the sites of retiring Xcel Energy coal plants, with the other location at the Comanche Generating Station in Pueblo, Colorado. Xcel in August invited proposals from clean energy companies located in Wisconsin with commercial operation dates from 2027 to 2029, helping to replace the capacity of the Allen S. King plant, a coal-fired plant in Oak Park Heights, Minnesota, that is scheduled to retire in 2028. Xcel plans to reuse existing grid connections at the King plant site, allowing customers throughout the Upper Midwest to benefit from the new energy resources.
Xcel is also pursuing the potential of the hydrogen economy. A pilot project with Bloom Energy and Idaho National Laboratory begins in early 2024 at the Prairie Island Nuclear Plant in Red Wing, Minnesota. Xcel is participating in two hydrogen hub applications competing for $8 billion in U.S. Department of Energy funding. They include the Western Interstate Hydrogen Hub, Xcel’s own proposal to build a green hydrogen hub on the eastern plains of Colorado as part of a multi-state hydrogen network that includes partners with projects in New Mexico, Utah and Wyoming. “Xcel Energy’s project offers a strategic location near existing and future wind and solar energy, power plant infrastructure and favorable geography for underground hydrogen storage,” the utility states in its annual Sustainability Report.
In yet another piece of out-in-front news, Xcel in August announced its Clean Heat Plan for Colorado, the company’s first significant proposal to strategically reduce greenhouse gas emissions across the natural gas system, in response to Colorado’s Clean Heat Standard legislation, which aligns with the company’s vision to provide a net-zero natural gas system by 2050.
No matter where you stand in its territory or in its strategy portfolio, Xcel Energy’s vision is not in short supply.
A Place With Vision
Xcel Energy’s Program Menu Serves Companies Hungry for Growth
Special Economic Development Rates: In Wisconsin, companies have a choice between a revenue-based construction allowance for distribution extension to serve the new electrical load or a five-year waiver of distribution demand charges (with no construction allowance).
The special rate was integral to $22 million in improvements made by Hewlett Packard Enterprise to a new Global Center of Excellence for High Performance Compute Manufacturing in Chippewa Falls, Wisconsin. Special EDRs are available in Minnesota and Colorado too.
The utility’s Certified Sites, Ready Sites and Ready Buildings programs are robust. The total real estate program today includes 44 Certified Sites encompassing 14,000 acres; 12 Ready Sites totaling 1,600 acres; and 33 Ready Buildings totaling 10 million sq. ft.
Empower Facilities is a turnkey solution that delivers facility system upgrades to improve energy efficiency and reliability, meet sustainability goals and reduce costs.
Empower Intelligence takes things one step further by delivering powerful reporting and monitoring solutions for a customer’s electricity, natural gas and water usage. “Commercial real estate, manufacturing, cities and schools alike use Empower Intelligence to save energy expense and boost staff productivity,” Xcel explains.
Empower Resiliency is a new solution offering now available in Minnesota and Wisconsin that will provide a convenient, affordable option for customers to increase their energy resiliency. The new program provides analysis, design, construction and maintenance of resiliency equipment for an extra layer of reassurance behind Xcel’s 99.9% power reliability.
2022 saw the launch of the Xcel Energy Corporate Economic Development Grant Program, designed to stimulate growth, job creation and capital investment within communities Xcel serves by providing funds to drive industrial development.
