Dive Brief:
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Xcel Energy has a pipeline of 6.7 GW of new data center projects in the works, Xcel President and CEO Bob Frenzel said during the company's second quarter earnings call on Thursday.
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Although the company is still crunching the numbers, Frenzel said Xcel will likely need need additional transmission and generation assets in order to meet this new demand.
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The company also spent $1.7 billion on resilient and reliable energy infrastructure during the second quarter in order to address wildfire risk. Xcel is still working through claims and lawsuits related to wildfires in Texas and Colorado in 2021 and 2024.
Dive Insight:
Enormous new electrical demand is an industry-wide trend, but Xcel could attract a disproportionate share of the new load on account of its low energy costs and the availability of water, fiber infrastructure, and open land within its service territory, Frenzel said.
The company experienced a “material shift” in electrical demand during the second quarter as the company lined up new data center prospects, Frenzel said, including already-announced deals with Meta and Microsoft in Minnesota and QTS Realty Trust in Colorado.
Nearly half of the company's total growth is now coming from tech companies seeking contracts for new data centers, Frenzel said. The other half is coming from a combination of electric vehicles, the electrification of oil and gas production and other industries, and from economic growth.
If all these contracts come to fruition, the growth in demand could exceed 9% per year, Frenzel said, though Xcel CFO Brian Van Able said the company is still in the planning process for these new projects and that more solid numbers would not be available until the third quarter.
Realistically, Xcel does not have 6 GW in spare capacity and so the company will likely need to issue requests for proposals and update its resource plans to add generation in response to growing demand, Frenzel said. The company will also need to look at building new transmission to meet demand, he said.
Meanwhile, Xcel spent $1.7 billion on wildfire mitigation as the company continues to grapple with the fallout from the 2021 Marshall Fire in Colorado and the February 2024 Smokehouse Creek Fire in northeastern Texas and western Oklahoma. Xcel has so far settled 45 of 141 claims related to the Smokehouse Creek Fire, and faces 21 lawsuits associated with that fire, Van Able said.
According to Van Able, the company does not expect its liability for this fire to exceed its $500 million insurance policy, as most of the claims stemming from the fire involve agricultural losses.
In Colorado, where the company faces hundreds of lawsuits stemming from the $2 billion Marshall Fire, Xcel recently filed a second wildfire mitigation plan with initiatives to improve the company's situational awareness, improve weather and fire forecasting, and to deploy new monitoring technologies including AI-enabled cameras.
The company has conducted proactive public safety power shutoffs during recent high-risk events in Colorado, Texas and New Mexico, Frenzel said.
