Energy in Colorado continues along two paths
Energy, especially in Northern Colorado, cannot be described without looking at the two primary sectors: traditional and renewable energy. Both are critical to the economy of the region, with Weld County the epicenter for oil and gas production in the state — and one of the leaders in the nation — along with nontraditional sources now in great demand as America shifts from carbon-based fuels to renewables.
Oil and gas is part of the natural resources and mining sector, which accounts for a tiny share of the total employment in the state at about 1%. However, income levels rank among the highest in the state. And employment levels are rising — about 5.3% more jobs coming in 2024, according to the Leeds School of Business at the University of Colorado.
Legislation and consumer demand is forcing utilities to convert from carbon-based electric generation to renewables, and that is happening rapidly with public commitments to achieving near-100% renewables by 2030.”
Colorado ranked seventh in the U.S. by the U.S. Geological Survey for oil and natural gas, with much of that in Weld County.
The industry lives and dies based upon per-barrel prices of oil, which has been fairly stable this year in the $60 and $70 per barrel range.
The future of the traditional oil and gas industry depends in large part on government regulation, worldwide political conditions and changing social attitudes, which have resulted in widespread changes, for example, in the electrical industry. Electricity producers have been forced by consumers to rapidly convert their generation infrastructure from coal or gas-fired to wind or solar sources.
Still, oil production in Colorado is predicted to be about 164 million barrels this year, about the same as last year but below the all-time high in 2019 of 192 million barrels. On the renewable side of the industry, the state benefits from an abundance of solar-clear days and wind corridors suitable for feeding wind farms.
The U.S. Energy Information Administration reported that clean-energy resources account for 37% of the state’s energy generation in 2022. The state ranked 18th nationally for clean energy jobs with about 63,780 employed in the industry, according to data compiled by the Leeds School.
Legislation and consumer demand is forcing utilities to convert from carbon-based electric generation to renewables, and that is happening rapidly with public commitments to achieving near-100% renewables by 2030.
A key to reaching that level will be handling cloudy, windless days. Utilities are building large geographic transmission networks so that one region of the country can benefit from an abundance of renewable power in another region. They’re also working to build large battery arrays that can support electricity consumption demands during still, dark periods. Hydrogen as a source of fuel for demand generation is another alternative, but is limited somewhat by the difficulty in transporting and storing the element.
Utility rates in Colorado are below the national average at 14.22 cents per kilowatt hour.
Industry has joined the effort to convert to cleaner energy sources. The largest windmill manufacturer in the world, Vestas Wind Systems A/S based in Denmark, has large windmill blade and nacelle manufacturing facilities in Windsor and Brighton.
Wind accounts for 75% of the state’s renewable electric generation at 5,135 megawatts with an additional 380 megawatts planned by the end of this year, the Leeds School reported.
Because wind farms require a lot of land, rural areas tend to benefit from the salary levels paid to workers, and landowners benefit from lease payments.
Solar, while a smaller percentage of the total renewable energy produced in the state, has a great potential because of the state’s 300 sunny days each year. Solar also will likely benefit from incentive programs that encourage homeowners and commercial property owners to convert their rooftops to building dispersed energy generation projects.
Geothermal has yet to gather traction in Colorado with industry sources saying that greater incentives are needed. Enterprise Zone Tax Credits are available in some areas of the state.