Figure 6 below shows direct comparisons between Colorado’s nameplate electrical power capacity by fuel source and electrical power generation by fuel source. Unfortunately, there is not a data set dating back to 1990 for power generation, as there is for nameplate capacity. In this comparison, it is easier to see that actual power generation by fuel source has shifted considerably in the past few years while emissions have only recently declined. CO2 emissions fell significantly in 2020, due to COVID-19 policy measures, before climbing slightly through 2022 and decreasing again in 2023. The charts for nameplate capacity and actual power generation show the addition of wind and solar into the grid and the decline in coal-fired power generation. However, it seems that the decline in coal-fired generation has more to do with emissions reductions than the addition of wind and solar power.
The modest reductions in Colorado CO2 emissions correspond with increases in electricity prices, indicating that the cost for reducing coal use and increasing wind and solar use contribute to rising electricity prices. Figure 7 shows Colorado CO2 emissions and Colorado electricity prices dating back to 1990. The recent decline in CO2 emissions is met with a significant uptick in electricity prices. Colorado emissions have declined from 128.3 MMT in 2019 to 118.4 MMT in 2023 while electricity prices have risen from 10.2¢/kWh in 2019 to 11.8 in 2023.
When discussing energy and power it is important to clarify what fuel sources are being used to generate electricity. As of 2023, coal accounted for 32.9% of Colorado power generation while natural gas accounted for 30%, wind accounted for 28%, and solar for 6.3%. This large chunk of coal-fired power generation is important to appreciate and address in the context of Colorado policy focused on CO2-emission reduction that plans to retire all coal generation between 2025 and 2031; this means that one third of Colorado’s power generation is planned to be removed in the next few years, largely without concrete plans to replace it.
Figure 8 shows Colorado’s percentage shares of power generation by fuel source in 2023.
The following map and table, Figure 9, shows all Colorado coal-fired power plants and their respective capacities and year of planned decommissioning. Each of these plants is slated for decommissioning in the next several years, beginning in 2025 with the Pawnee Station and its 505MW of capacity. In total, over 3,500MW are planned to be decommissioned by 2031.
Figure 9
Existing reductions in Colorado coal fired power generation along with additions of wind and solar power coincide with visible price increases, especially in the past four years.
Alongside Colorado, the whole of the US has experienced substantial electricity price increases—more than 30% since 2020, according to the Bureau of Labor Statistics, rising from 13 cents per kWh to 18 cents per kWh from 2020 to 2024. This price increase is significantly above the high inflation levels seen in the US since 2021 and far above the Federal Reserve’s 2% inflation target. US inflation peaked in June of 2022 at 9.1%, but electricity inflation peaked in August of 2022 at 15.8%. It declined to 2.1% in August of 2023 only to rise to 5.8% in May of 2024, well above overall inflation levels. In Colorado, the price of electricity rose from an annual average under 10¢/kWh between 2010 and 2020, with almost no inflation on electricity prices, to nearly 12¢/kWh in 2023, according to the EIA. The price of electricity in Denver, according to the Bureau of Labor Statistics, has risen from over 13¢/kWh in 2020 to 18 in 2024. The rise in Colorado electricity prices coincides with both a decline in inexpensive coal-fired baseload power generation and an increase in wind and solar power generation. This correlation is seen in US electricity prices and US power generation by fuel and in Europe where wind and solar penetration into the grid correlates to increased electricity prices.
Figure 10 shows Colorado electricity generation by fuel source and electricity prices. The data for power generation by fuel source only dates to 2001. The chart clearly illustrates three simultaneous trends: a decline in coal-fired power generation in the past few years, from 25,321 MWh in 2019 to 18,788 MWh in 2023, gradual additions of wind and solar power generation, from 12,070 MWh in 2019 to 19,616 MWh in 2023, and an increase in price, from 10.2¢/kWh in to 2019 to 11.8 ¢/kWh in 2023.
Figure 10
This same trend is more evident in a longer historical chart of Colorado electricity prices and Colorado nameplate power capacity by fuel type. Figure 11 shows Colorado electricity prices on the right axis and Colorado nameplate power generation capacity by fuel type on the left axis. The capacity increase of wind and solar power along with the gradual decreases of nameplate coal capacity match a significant price spike in electricity prices from 2019 to 2023. Coal power generation capacity declined from 4,792 MW in 2019 to 4,199 MW in 2022 while wind and solar power generation capacity increased from 4,366 MW in 2019 to 6,480 MW in 2022.
Figure 11
There are several reasons for the associated price increases when decreasing coal capacity and increasing wind and solar capacity. Investment in wind and solar requires redundancy and significant transmission costs. Coal is an inexpensive and dispatchable baseload power source. The increase of nameplate power capacity coming from intermittent and less reliable power sources like wind and solar inherently reduces grid reliability and increases costs as Colorado baseload power from coal is being replaced with less dispatchable and less reliable power sources.
Coal has been shunned by US and Western governments due to its CO2-emission profile in comparison to other fuels (in addition to other pollutants and air quality), but its price and its solid rock form make its role in electricity prices and energy security indispensable in both affordability and reliability. Figure 12 below is a chart of Colorado and US electricity prices and the price of coal for electricity in the US.
Figure 12
Oddly, due to Colorado’s emission reduction goals, natural gas, which is more energy-dense and cleaner than coal from a CO2 emission perspective, has a smaller share of actual power generation than coal. The role of natural gas in power generation and direct home use is critical in Colorado and the US, but aggressive CO2 emissions-reduction policies and the difficult policy landscape associated with natural gas and coal stymie the growth of natural gas usage in Colorado and, in turn, the state’s ability to provide a cleaner, more reliable, and cheaper power source than wind or solar. Policymakers and utility providers are reticent to invest and increase natural gas power generation capacity despite its availability, low cost, and power density in comparison to wind or solar.
Natural gas’ role in power generation and nameplate capacity is critical to discuss for a few reasons: natural gas, like coal, provides the US and Colorado with a reliable and dispatchable baseload power source. The US is the largest producer of natural gas in the world and has abundant production and reserves. Natural gas prices reached record lows in 2024 and natural gas powers half of the US grid, but the price of electricity rose, not fell, in 2024.
Shown in Figure 13 is natural gas’ share of Colorado’s electrical power nameplate capacity, 39%, and its share of Colorado’s power generation, 30%, on the left axis, and the prices of electricity in Colorado and the price of natural gas from the Henry Hub on the right axis. Despite the large role of natural gas in Colorado’s nameplate capacity and actual electrical power generation and the low prices of natural gas in the last couple of years, Colorado electricity prices have continued to rise. As described above, this is partly due to the addition of more intermittent sources of electricity like wind and solar, but clearly electric rate payers have not benefited from the low price of natural gas, not being passed along to the consumer via electricity prices. This is seen in the US more broadly given the dramatic escalation in electricity prices and the role of natural gas, which is roughly half of the US grid (Figure 14).
Figure 13
Figure 14
Figure 15 shows Colorado’s nonelectric consumption of natural gas and natural gas prices. The left axis shows Colorado’s nonelectrical consumption of natural gas, the natural gas used directly by households and businesses through appliances, fireplaces, etc. The right axis shows both Henry Hub natural gas prices and Colorado residential natural gas prices charged to the consumer. This chart and these figures show a dramatic and growing disconnect between the underlying price of natural gas and what the consumer pays for natural gas directly. This disconnect began in 2008 when prices for natural gas dropped but prices charged to the consumer did not decline. More recently, in the past couple of years, as prices for natural gas declined, prices charged for residential natural gas to the consumer rose dramatically.
Figure 15
Figure 16
This is important because unlike crude oil, where consumers feel both inflation and price increases at the pump when oil prices rise, they also feel deflation and lower prices at the pump when oil prices decline. The dramatic decreases in natural gas pricing due to the abundance of natural gas being produced in the US is not being passed along to the consumer, in Colorado or the US more broadly. Recent price spikes in residential natural gas prices are partly attributable to storms in Texas during 2021 and the beginning of the war in Ukraine in 2022; however, the decline in natural gas prices, below $2 per MMBTU in 2024, has not been passed along to the consumer. In fact, residential prices for natural gas in both Colorado and the US have continued to rise in recent years, while Henry Hub prices have declined. This suggests that other factors, either regulatory or utility-driven, are sustaining higher consumer prices even as wholesale prices of natural gas have fallen.
Colorado’s Production of Traditional Fuels
Colorado oil, natural gas, and coal production are important revenue sources and offer meaningful energy security. As Colorado implements aggressive policies aimed at reducing CO2 emissions, coal production and oil and gas production are taking a hit. This is despite these traditional fuels making up over 80% of global primary energy consumption in 2023 (Energy Institute). Production of Colorado energy impacts Colorado residents’ access to energy, their price of energy, and, in turn, Colorado’s economic competitiveness, Colorado’s energy security, and US energy security.
The following sections summarize the current state of Colorado oil, natural gas, and coal production.
Colorado Oil and Natural Gas Production
Colorado produces nearly half a million barrels of oil per day and almost 5 billion cubic feet per day of natural gas. Despite the passage of SB19-181, which severely limits the ability to permit drilling for oil and gas wells in Colorado, the Colorado oil and gas production base remains one of the largest in the country and larger than those of some small OPEC producing countries like Gabon and the Republic of Congo.
Colorado’s oil and gas production speaks to the incredible geology and resource base within the state, but the flat and rangebound production in Colorado despite the rise in oil prices since 2020 illustrates the harsh regulatory environment oil and gas operators face. Operators can get permits, but permitting is far more difficult and permitting has been dramatically reduced since the passing of SB19-181, limiting the ability of operators to do business and invest in Colorado. This is despite the failed passage of Proposition 112 in Colorado in 2018, which would have instituted extreme setback requirements and severely reduced oil and gas drilling.
While US production of oil and gas has grown to record highs in the past two years, 13.2 million barrels per day currently, Colorado production has been stuck between 400,000 and 500,000 barrels per day. Colorado production peaked in October of 2019 at 568,000 barrels per day then bottomed out in March of 2021 at 387,000 barrels per day due to demand shocks in 2020. Although some production has returned, it is not in line with the growth in the US. This is due to permit approvals limitations in Colorado, reduced investment, and forced consolidation to access and acquire permits. Colorado oil and gas production is limited by a restrictive regulatory environment and access to permits, not by the resource potential of the rock.
The following chart, Figure 17, shows historical US and Colorado oil production. US oil production is on the right axis and Colorado production is on the left axis.
Figure 17
Figure 18 illustrates the dramatic decline in permit approvals in Colorado since the passage of SB19-181 and the subsequent impact on completions (wells being brought online and into production).
Figure 18
Figure 19 shows Colorado oil production and oil prices.
Figure 20 shows Colorado oil production and the volume of Denver–Julesburg Basin production as well as the volume of oil production from Weld County. The Denver–Julesburg Basin is the state’s largest basin contributor for oil-production and covers Weld County, northern Colorado, and portions of southeast Wyoming and eastern Nebraska. Weld County produces the most oil in Colorado.
Figure 21 is a heat map of Colorado oil production by county, illustrating the above chart in map form.
Figure 22 shows historical US and Colorado natural gas production. Like oil, as natural gas production has continued to increase in the US, natural gas production growth in Colorado has halted. Natural gas production growth in the US is largely the result of associated gas production which has continued to rise with oil production amid healthy oil prices.
Figure 23 shows Colorado natural gas production and natural gas prices.
Figure 24 shows Colorado natural gas production, the volume of natural gas coming from the Denver–Julesburg Basin, and production from Weld County. Unlike oil, natural gas production is less concentrated in Weld County and produced throughout the state. While Weld County and the DJ Basin produce a great deal of Colorado’s natural gas, Colorado is home to the prolific Piceance Basin in the west, North Park Basin in the north, and the San Juan Basin in the south.
Source: Enverus and EIA
Figure 25 is a heat map of Colorado natural gas production by county.
Figure 25
Colorado Coal Production
Colorado coal production has declined from 40 million short tons in 2004 to just 12 million short tons in 2023. This decline in production corresponds to the decline in coal prices in the US. Two main factors have impacted coal’s production in Colorado and the US more broadly: the shale revolution, resulting in the rise in natural gas production and the decline in natural gas prices, competing with coal for power generation and the policy push for cleaner, lower CO2 emissions and less polluting power generation. While US air quality standards and regulations on pollutants, including NOX and SOX, are the most stringent in the world (meaning that US coal-fired power generation is typically cleaner from a pollution and particulate standpoint than that in the developing world, like China), natural gas offers an extremely abundant, cheap, and energy-dense fuel that is cleaner to burn from a pollutant standpoint and because it is so energy dense, it also inherently produces less CO2 than coal.
As the above sections on electrical power generation and electricity prices indicate, coal-fired power generation and coal production is still critical to Colorado’s and the United States’ electric grids. Unlike natural gas, coal is a solid rock that can be stored and used whenever it is needed; because of this, it can help offset price variability in natural gas. The aggressive decommissioning of coal, beginning in Colorado in 2025 and culminating in 2031, has already begun in earnest across the US and is being met by price increases in electricity. Coal’s stable, reliable and dispatchable baseload power source is being removed from the grid while wind and solar are being added.
The following chart, Figure 26, shows Colorado coal production and Colorado coal prices.
Figure 26