Small Colorado town chosen to help connect eastern and western electric grids with $1.2 billion investment
As Coloradans struggle with affordability, there may be relief on the way. The Department of Energy on Thursday awarded the Colorado Energy Office and Xcel Energy a $250 million investment to strengthen a key transmission connection between our state and Texas. Along with funding from Xcel, this $1.2 billion project will upgrade aging infrastructure, help avoid power outages and bring energy costs down.
"As America's demand for electricity grows, one of our biggest challenges isn't simply producing more power, it's making sure we can move the power to where it's needed," Assistant Secretary of the Department of Energy Tim J. Walsh said at the Arapahoe County Fairgrounds on Thursday.
Robert Kenney, president of Xcel Energy, Colorado, said the Colorado to Texas Connection Project will be built on mostly existing infrastructure to bridge the gap between the eastern and western electric grids. That will increase electricity from 210 megawatts to 700 megawatts, with the ability to go all the way up to 2,000 without new equipment. Enough energy to power roughly 500,000 homes. On the Colorado side of the project, energy will move from Lamar to the high-capacity Sun Valley substation, east of Pueblo. Walsh explained the project will unlock a bottleneck, allowing more traffic, or electrons, to flow through.
CO2TX will use new technologies such as sensors to measure real-time weather conditions, ensuring safe transmission or directing power away from congested paths, according to the DOE. This will be especially useful for Colorado since we've seen Public Safety Power Shutoffs, or PSPS. In December of last year, Xcel preemptively cut power to tens of thousands of customers west of the Denver metro area to reduce the risk of high winds sparking a wildfire. It took days for power to be restored to some homes and small businesses.
This wasn't the only investment Thursday. The DOE will spend almost $2 billion in total trying to squeeze more electricity out of the nation's aging and stressed power grid, while the Trump administration steps up efforts to avoid blackouts as artificial intelligence is sending energy demand through the roof. Will Toor, executive director of CEO, said it's been well known the grid is in desperate need of revitalization long before the explosion of data centers. Gov. Jared Polis said CO2TX specifically is not about data centers or energy generation, but that it's about moving energy from one place to another for things like home heating and cooling, increased population and electric vehicles.
"This is especially important with the growing push in Colorado for the electrification of everything," Walsh said.
Colorado ranked at the top for EV sales in the nation in the third quarter of 2025, according to the CEO. Walsh added that that's "only good if we have the electricity to plug them in."
