How Colorado Electric Customers Are Leading a Co-op’s Clean Energy Journey — Episode 159 of Local Energy Rules

I happened to be there at a time where we were starting to make the first significant federal investments in solar PV and wind and biofuels, and even exploring things like carbon capture and storage. So it was a really great time to kind of kick off a lot of things that are now really massively a part of the federal climate agenda. And that was great. But as you well know, you can serve in politics and policy, and it’s a really intensive sport. And when it came time for my wife and I to start a family, we said, hey, let’s find something else to do. I was fortunate to land with the electric power research Institute, with EPRI, had a nice seven year stint there in a variety of different roles, fossil energy, renewable energy, energy analysis, environmental science, and, and that got me into the utility industry.

About 2013, I was given a really great opportunity to move to the National Renewable Energy Lab and start up their grid modernization practice. We had a facility called the energy systems integration facility that was sort of a distribution grid in a box. And we were invited to plug all sorts of things into it, right? Solar panels and batteries and electric vehicles and hydrogen electrolyzers and, you know, kind of make it dance and sing like any grid under any condition, anywhere in the world. And it was super cool. Partnerships were a key there. And along the way, we began to partner with a number of utilities, including the one that I lead today, Holy Cross Energy. And that led into a conversation of, hey, you know, all this research is really great, but how about we do this on the operational side? And so in 2017, I made the jump to operations and it’s been fast forward ever since.

In fact, that’s how I got here. You know, prior to my arrival, there was a large community effort that said, hey, look, we are interested in climate action as a region. And we know that every study out there, including some that I helped author way back when, starts with electrification and cleaning up the electricity supply as a means to decarbonizing the other sectors of the economy. And so unless we decarbonize electricity, we can’t go the rest of the way to taking climate action and getting to a more sustainable future. And so there was a concerted effort on the part of the community to put directors on the board that were focused on decarbonizing our electricity supply and those directors, when they have the opportunity to do so, hired me and charged me with a responsibility of making that happen. And their, their choice of me was deliberate based on, I think my history in working in low carbon technologies and electricity grids, to be able to have that support from the community, from the regulator, from the customer base, I think is key to having the kinds of transformation that we’ve been able to obtain in just a few short years.

And what happened was, is as we started to firm up those first steps of the journey, the rest of the journey in the direction became clear or clearer. And we said, Hey, you know, not only can we get to 70 and, and keep our power costs largely consistent with what we were planning to pay. Anyway, we actually think we can beat those power supply costs in our baseline. And we actually think we can go further and bring in more clean energy, given the prices of solar dropping by 80 plus percent over the last decade, the prices of wind and, and batteries doing the same thing over the last decade, sort of 70 to 80%. There’s an opportunity to do all of this in a way where it gets better the further that you go. So we kinda rolled up our sleeves and sharpened our pencil again and said, okay, we know we have a path to 70, but now we think we can actually get to a hundred percent.

Like a lot of utilities out there, that last 10% of decarbonization is gonna be really tough. And while we don’t know exactly how we’re going to approach that, we have a bunch of different ideas and I’ll be happy to, to chat more with you about those as they come about here in the next few minutes. But we really think that you shouldn’t let that last 10% be the enemy of the first 90, right? It’s like when we go on a hike, which we do a lot here in Western Colorado, we don’t look at the top of the summit and go, my gosh, it’s really steep. And then that’s why we stay in the car, right. We actually go on the hike and we get to a point where we either progress to the summit and get to where we want to go, or for whatever reason, we, we pause at a vista, take in the sites and then, you know, satisfy ourselves that accomplishment. I think with our community and the ethos that we’ve created here, we’re pushing on to the summit. And we’d actually like to be the first ones to get to the top.

Holy Cross was fortunate enough, we were once a part of a now bankrupt wholesale electric cooperative G&T called Colorado U. It was a predecessor to Tri-state in many ways. A lot of the members of Colorado U, when it went bankrupt in the early nineties, went over to Tri-state and took on full requirements contracts. There, we took on a wholesale power supply agreement with Xcel. Four of us in the state did that at that time, but among the four of us, Holy Cross was the only one to negotiate the ability to purchase just raw wholesale energy from others at any point that it suited our interests. So we had the ability to buy it all from Xcel Energy, but we also had a contract provision that allowed us to buy it from a third party, a Black Hills, or as we see today, a wholesale market. And that turned out to be very fortunate, because what that allows us to do is to enter into purchase power agreements with independent power producers, where we purchase all of that energy from that project. So if, you know, for example, we’re looking at contracting for a wind energy project in Eastern Colorado that will be delivered on the Xcel transmission system. It will replace the requirements, contract purchases from Xcel and given the formula rate that they have at Xcel and the PPA contract, we actually turn out to have a lower overall cost by going with this wind energy PPA. And you can imagine how, if we do that over and over and over again, we can have a mix of utility grid connected resources, local clean energy resources in our footprint, like our solar plus storage projects that we have coming on this year, as well as market purchases and our relationship with PSCO – with public service Colorado.

So it’s, it’s a really neat way of hedging different sets of resources with different costs, with different load shapes. So we can take advantage of geographic diversity. We can take advantage of financial diversity and it’s paid a lot of dividends and, and my guidance to anyone that’s out there that’s a retail electric provider is that they should be trying to negotiate a similar sort of relationship with their wholesale supplier and wholesale supplier should be open to these kinds of relationships because if done right, they can benefit both the parent and the kiddo. We have done things together with Xcel Energy on our respective transmission systems, where we’ve worked together to improve the reliability of our respective grids. We’ve coordinated on distribution upgrades. Our distribution systems are intertwined and we support each other and feed each other energy, which we couldn’t do if we were in a rigid set of, you know, standard agreements. So I think it’s actually worked out really well. And now that they’re moving to clean energy, we’re moving to clean energy, we’re doing it together in a lot of different ways. They do innovations and programs. We pick it up and vice versa. To me, that’s what the modern compact between wholesale and retail needs to start to look like.

I have to give credit where credit is due. You mentioned you’re talking with the Kauai Island utility cooperative, David and his team, the manager, David, and his team out there were kind enough to show me their solar plus storage projects at the end of 2019. And I, I literally came back saying we need those. They were able to make those units ramp up as the rooftop solar on their system ramped down. And you could just sit there in the control room and watch them. And it was just this beautiful thing. And I said, Ooh, I gotta get me one of those. Uh, so we actually have three projects, the CMC one, and then two 10 megawatt, 20 megawatt hour projects, that’ll deploy next year, one in Rifle and the other one at Parachute. So strategically located on our system. And I expect that we’ll do more of those.

Those add to a 12 megawatt biomass plant in the town of Gypsum, about 10 megawatts or so of distribution connected hydro resources, and then a three megawatt coal mine methane recovery plant, where we’re taking methane gas that would be leaking from an old closed coal mine. Obviously methane has a huge greenhouse warming potential. So to mitigate that, we’re actually taking the methane that would otherwise vent to the atmosphere. We’re capturing it, running it through a combustion turbine, standard gas turbine, creating three megawatts of energy. The resulting carbon dioxide has a lower greenhouse warming potential. It ain’t zero, but it’s certainly better than the methane. And one of the things that we’d like to do is to figure out, okay, how do we, how do we maybe capture that carbon and reinject it back into the mine at some point, we’ve got that project and we’ve got potentially one other like it in our service territory, near the town of Redstone, uh, which is along a long stringy distribution feeder that, you know, one false tree fall and a few hundred people are out. So wouldn’t it be great to co-locate this clean energy resource in a way that provides reliability and resilience as well.

And those projects are just the utility scale ones. We then have a number of other programs where we’re fostering, uh, investments in rooftop solar, and more distributed community-based solar working with our towns and our schools and our critical infrastructures. And then our individual members. We have a goal of establishing at least four megawatts of additional rooftop solar PV every year as part of our resource plan.

Because at that point they’re operating similar to an independent power producer that’s providing services to us, the utility. And so our point of view is let’s have that transaction, let’s contract for that, whether it’s a, a certain tariff, whether it’s a capacity credit for the use of a resource, whether it’s, you know, something that’s based on what we think the value of solar will be. Obviously there are delivery charges associated with moving the energy from point A to point B that even the net metered rooftop solar customer needs to be part of compensating for. And we’re right in the middle of having that discussion right now with our board of directors about how our financial model needs to innovate in order to meet the innovation that we’re seeing on how we’re delivering and, and what our role is.

I think John, this, the heart of this is utilities have always fancied themselves as we are providers of electricity as a commodity. We’re selling kilowatt hours. And the reality is, as you know from your work, consumers have options other than us to get kilowatt hours. Retail competition, community choice, and now technology. What’s to prevent a Holy Cross member from going to the Lowe’s or the Home Depot and generating their own electricity? Nothing. So we need to look to that and say, how do we turn that challenge into an opportunity and allow them to help us provide reliable, resilient, electric service with the resources that they’re willing to bring to the table. And then a piece of this is for those that can’t invest their own resources in it, those that are low or moderate income, how do we, as a utility in our society, partners, put together the resources so that they’re not denied equitable access to the benefits of clean energy. Can we provide them other options? Can we provide no money down, 0% financing? Can we provide them with a package of incentives and rebates and programs that make it all worthwhile or that work in a multifamily housing environment? And so these are the challenges that when we look at our energy programs that we’re excited to take on.

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And so I think that as part of this, our mission is to try to figure out a way that we can help create an economic development opportunity for the regions that we serve so that, you know, to be blunt, if they’re consuming more electricity and we’re moving more electricity across the same size system, more or less, than the costs per unit of delivery go down. And if we’re work working on the wholesale power side to bring our costs down on the costs of the electricity that we’re procuring, and we’re looking to reduce the costs of our delivery through these economies of scale, then we’re keeping our bills low and affordable for the people that we serve. And that’s, that’s making it easier to decarbonize, which is for me, at least, the the ultimate goal.

The last thing I’ll say on this topic is we’re gonna be into a situation at very high levels of renewables where we got too much wind in the overnight, and we got too much sun in the midday. And so why wouldn’t we sit there, instead of paying a penalty for curtailing it, why wouldn’t we pay somebody an incentive to use it? And so, if I was an industry that was in the process of making something that I could just optimize my manufacturing runs, or my water treatment, as we’re doing currently with Eagle River Water and Sanitation District, if you can move some things around to take advantage of that low cost clean energy, and we can help you do it, then maybe you can upsize your facility. You can create new jobs, you can help the family stay here in this high cost area who would otherwise have to move out. And that’s a good thing.

So I think electrification done correctly can actually help us optimize the use of the distribution infrastructure. It can help us move loads around and help us manage the imbalances that we’re naturally going to see from the inherent variability of the wind and solar resources that we’re relying on. It’s a question of how do you, how do you incentivize, how do you create those technology opportunities? How do you get consumers to adopt them with as minimal friction as possible? One click Amazon simple, you know, in my view. I punch it and I order it and it shows up and I plug it in and it works and it automatically communicates. And the next thing I know my bill goes down, right? That’s the kind of thing that I think we need to be innovating towards. If what we want is a participatory energy system where consumers have the opportunity to participate in operating their own energy systems and contributing to the energy system around them.

I say the opportunity because not all of us are gonna wanna do it. Some of us, you and me, we’ve got 14 apps. We love to manage those things. But, you know, for the single mom or dad with two kids in tow and dance schedules and soccer practice to go to, they just wanna set it and forget it, low cost. Keep my air conditioner on between 68 and 72, charge up my vehicle, use a hundred percent clean energy and keep my bill under a hundred bucks a month. Algorithms, you do it right. So we have to accommodate. And that’s the other thing that I really love about this industry is that we used to say rate payer, right? We used to say meter and everybody was the same. They’re not, they all want different things from us. And as I like to say to my own staff, as many times as they’ll bear to listen to it, if we don’t give our members what they want, somebody else will. So we better, we better start doing it, right? Because we want them to stay our members. We want them to, we want to continue to enjoy the right, to serve this community and do what we do.

So the community said, hey look, affordable housing, big deal. Let’s see what we can do here. The school district had some land. The county contributed the improvements. Our local Habitat for Humanity chapter contributed the builders and the building materials and the sweat equity. And the owners got involved and holy cross employees went out and volunteered. And it was all going pretty well until the town said, hey, you know, I know you guys have put in a permit to extend a gas line to this facility. It’s not gonna happen. It’s gotta be all electric. And the folks turned to us and we’re like, what do we do? And I said, hey, we’ve got this really interesting opportunity. We had been doing some research with my old group at NREL looking at what a high DER future would look like. And just coincidentally, the area that we were studying was Basalt. And so we had been modeling our distribution system with PV batteries, electric vehicle charging, heat, pump, water heater, air source, heat pump. We’d been modeling homes in the lab. The devices were on the lab floor. We kind of were making it all work with controllers and algorithms and whatnot. And we thought, boy, this is a really awesome opportunity. If we donate all of these, you know, really expensive DERs we could potentially engage the teachers in a learning laboratory to help us understand how these things really operate in the real world. And the teachers were game, the partners were game.

And so the first four of the 27 houses at the Basalt Vista were all electric, eight kilowatts of PV, battery storage, blue ion lithium iron phosphate battery storage in the utility closet, the home heat pump water heater, air source heat pump, level two EV charger. Some of the teachers didn’t even have electric cars. Some of ’em didn’t even have cars, but because they had an EV charger and it was powered by their solar, they’re like, I’m gonna go get one. Right? One of ’em even named their cat Tesla. They were so inspired by the project <laugh> so, so we were able to gain a lot of insight into how to run our grid that warranted the donation value.

And what that’s taught us is how to structure programs for affordability. We learned that a rebate doesn’t really work if you don’t have the money to invest in the first place. So can Holy Cross invest that money as capital, a different kind of capital investment? And can we recover that over the course of a longer period of time on the electric bill, right? Can we provide battery storage as a service by saying, Hey, here’s the battery. We’re gonna install it. We’re gonna maintain it. We’re gonna warranty it for a, you know, 10 year period. You’ll make payments for that service on a monthly basis. And at the end of the 10 year period, you get the battery free and clear, right? So this is how you make it available, right? Similar to how we’ve invested in community solar. For those that don’t have rooftops, right? If you live in a multi-family dwelling or if you’re in a, you know, mobile home park or someplace where solar’s just not gonna work out, maybe, maybe we have a aggregated set of consumers and we build something nearby.

It’s actually what we’ve done in a place in the Eagleville Valley called point zero, where we’ve gone in and done deep electric retrofits of mobile homes that are occupied primarily by income qualified folks. And instead of each giving them one panel and saying, good luck, we’re actually looking at the land adjacent to the mobile home park for potential development of a true community solar project. And working with a company called PowerField that specializes in ground mount solar. We can actually engage the mobile home residents in going out there and installing the solar themselves that will actually power where they live and it’s right there and they can see it and potentially they could even own it in the future.

I’m kind of curious, I just want to throw something at you that I’ve been thinking about. I, a few months ago, folks from the nonprofit called HEAT out in Massachusetts were on a couple podcasts to talk about this idea of geothermal micro districts as a way to provide all-electric heating and cooling to homes. I suppose I would also supply water heaters. For example, what’s interesting about it, of course, is that it’s a very, you have to be very systematic about it. You have to, you know, go a whole neighborhood at a time. It doesn’t really make sense to just do one off. Is that something, do you think electric utilities ought to be looking at like getting into that business of sort of providing home heating and cool? I mean, you already provide the cooling, right? You provide electricity to power someone’s air conditioner, you power an air source heat pump for someone. Is that kind of thing, would it ever make sense for Holy Cross or another utility to look into?

So one of the things that we have been exploring for a while, and I think we’re getting close to doing some work on is how we can create a thermal version of a smart grid where the heat pumps and potentially heat storage. You know, we have a large ice rink for example, that rejects a lot of heat. Why are we throwing that into the atmosphere? Why can’t we capture that, put it in a pipe somewhere and, you know, downtown, Denver’s got district heating systems that Xcel Energy’s looking at saying, Hey, you know what, maybe instead of being a pain in the backside to maintain, maybe that’s a critical infrastructure that will help us provide heating services across large districts, similar to what you described.

The fun part here is if you come up with a way to store energy as thermal, then remember that wind that I have in the overnight hours, right.  That I don’t know what to do with, I can heat up a whole lot of hot water and store it for a few hours. And then when everybody gets up in the morning and takes their shower or starts to run their washing and, you know, dishwashers and whatnot, that hot water is waiting for them without that draw on the electric system. And so that helps me reduce some of the times of day where I’m in deficit, right? And so you can see this synergy between a smart electric grid and a smart thermal grid just as we do today, between a smart electric grid and a smart water grid with some of our water utilities, it’s out there for the taking. The question is how are we gonna build the business case? How are we gonna invest in the capital? Are the technologies ready? And those are discussions that are underway right now. And we’ve got a couple of communities that burn natural gas to heat their sidewalks and their public spaces to melt snow. And I’m like, okay, there’s gotta be a better way. So we’re working on that.