A Colorado utility will spend more than $440 million over the next three years on a plan that focuses heavily on building electrification and energy efficiency measures, with the goal of reducing reliance on gas heating and cutting annual climate pollution by 725,000 tons.

Xcel Energy’s Clean Heat Plan, approved in early May, follows a state Clean Heat Law passed in 2021, Canary Media reports.

“The utility, which supplies both gas and electricity to its customers, submitted an initial plan that included proposals for large investments in hydrogen blending, biomethane and certified natural gas,” the report said. “But after strong opposition from clean energy advocates who say those paths are not viable routes to decarbonization, those proposals were reevaluated. Following a request from the (US) Sierra Club, the Natural Resources Defense Council and others last November, Xcel modified its original plan, which was submitted to the Colorado Public Utilities Commission.”

The bulk of the money will now go toward electrification and efficiency measures that the CPUC saw as the “most cost-effective and scalable way to reduce emissions from gas combustion and buildings in both the near and long term,” Meera Fickling, building decarbonization manager at Western Resource Advocates, told Canary Media. This makes Xcel’s Clean Heat Plan “a test case of a utility-led model for decarbonizing the gas distribution system” and a U.S.-wide model “for how gas utilities can dedicate resources to decarbonize their system over the long term.”

A highlight of the plan is the 20,000 heat pumps Xcel plans to install in residential buildings this year and the nearly 100,000 installations to be completed in just over two years. “The goals are really ambitious,” said Emmett Romine, the utility’s vice president of energy and transportation solutions. “When you look at the number of heat pumps and water heaters we have to install in residential buildings, it’s a tremendous amount of work.”

This measure will increase gas and electricity prices by 1.1% and 7% respectively over the next four years, says Canary Media. “But supporters say it’s worth putting money into a gas system that needs to be phased out – and that the climate benefits outweigh the upfront costs.”

Alejandra Mejia Cunningham, senior manager of state building policy at the Natural Resources Defense Council, called the plan “a very good example of how we need to pursue both sides of the equation simultaneously – decarbonization and electrification – but at the same time make sure that we start to downsize the gas system and eliminate unnecessary investments in it.”

Canary Media has further information on the development of the Xcel Energy plan and its expected implementation.