Xcel Energy delays project to deliver hydrogen to natural gas customers near Hudson, Colo.

A neighborhood in Hudson, Colo., northeast of Denver. July 15, 2023.
Kevin J. Beaty/Denverite
A neighborhood in Hudson, Colo., northeast of Denver. July 15, 2023.

Under its original plans, Xcel Energy would have already started construction on a controversial project to mix hydrogen into natural gas supply for Box Elder Creek Ranch, a suburban subdivision near the town of Hudson.

That timeline has now been delayed to the relief of some residents of the neighborhood, which is about 30 miles northeast of Denver. In order to win approval from state utility regulators, the company now acknowledges the project would not kick off until next spring at the earliest. 

"We continue to evaluate the project and have requested commission approval," said Michelle Aguayo, a spokesperson for the state's largest electric and gas utility. "If approved, we anticipate construction could begin around the middle of next year. " 

Across the country, natural gas utilities like Xcel Energy say hydrogen blending could cut climate-warming emissions and preserve a role for extensive pipeline networks. That's because hydrogen is a clean-burning fuel that can be coaxed from water with renewable electricity. 

Critics, however, warn the plan is a bad bet for the climate — and energy customers. As the smallest and lightest molecule in the universe, hydrogen can escape leak-prone pipeline networks far more easily than traditional methane used for heating and cooking, increasing the risk of explosions. Recent studies further suggest higher hydrogen blends — above 5 percent — can weaken and crack steel pipes.

All hydrogen also isn't created equal from a climate perspective. While the molecule can be drawn from water, most of the supply in the U.S. is stripped from natural gas, a process that releases carbon and can offset the benefits of burning it in homes. 

Xcel Energy claims the Box Elder Creek Ranch project will prove the company can overcome those challenges. It now must convince state utility regulators to let it proceed despite widespread objections from residents, consumer advocates and environmental groups.

A wonky shift in approach

Colorado's largest natural gas provider didn't always think it needed state explicit approval to proceed with the hydrogen-blending project.

It originally included the ratepayer-funded project in a filing meant to inform regulators about the climate impact of its natural gas system. Unlike other dockets before regulators, the proceeding wouldn't have provided an opportunity for other parties to intervene and adjudicate the case, potentially allowing the company to proceed on a rapid timeline. 

In weekly meetings, the Colorado Public Utilities Commission questioned whether the hydrogen project deserved greater scrutiny. In August, Xcel Energy elected to include the project as a part of a plan to comply with a state law requiring gas utilities to slash climate-warming emissions 22 percent by 2030. 

Since the commission won't approve a final plan until next spring, Xcel Energy pushed back plans to begin construction. 

The decision also gave critics an opportunity to object to the project. Joe Pereira, the deputy director for the Colorado Office of the Utility Consumer Advocate, said his office is still working on its formal position, but initial research suggests there's a risk that hydrogen blending could damage gas pipes in homes and appliances. 

"We don't know what hydrogen does to residential furnaces and water heaters," Pereira said. "What if the use of hydrogen negates a warranty?" 

Pereira added it's unclear if the company has conducted sufficient outreach in Box Elder Creek Ranch. While the company said it has sent mailers and held meetings with the local homeowners' association, CPR News found many residents were oblivious to the project as of last July. 

Even with sufficient public awareness, there's a more fundamental question of whether customers even want to participate, Pereira said. "The company takes the position that customers don't need to consent. We might question that."

Meanwhile, environmental advocates argue hydrogen blending is far less cost-effective than their preferred approach: ditching natural gas in favor of electric stoves and heat pumps. 

A coalition of groups — the Natural Resource Defense Council, the Sierra Club, the Southwest Energy Efficiency Project and Western Resource Advocates — have filed official objections questioning the environmental benefit of the pilot project.

It points to a state report finding the maximum safe hydrogen blend for consumer appliances is as little as 5 percent by volume, which would only secure a 1.5 percent cut in climate warming gases compared to traditional methane.

The groups argue the commission shouldn't let Xcel Energy invest ratepayer dollars in such a limited climate solution, especially when it could provide an excuse to expand a natural gas network that's pushing the state's climate goals further out of reach. 

Growing concern from residents 

Meanwhile, Xcel Energy argues that other utility companies around the country have already demonstrated hydrogen blending is a safe and effective tool to cut climate emissions. As for concerns about hydrogen damaging steel, it notes the pipeline network in Box Elder Creek Ranch is made from polyethylene, which researchers agree is far more effective at containing the gas. 

Those assurances have been little comfort to Alisson Soehner, a mother of two in the neighborhood who works as an environmental engineer focused on air quality issues.

Shoener often assesses Colorado’s climate efforts in her professional role. Rather than a realistic understanding of current technology, she said the policies are too often based on arbitrary emissions targets.

Shoener now worries Xcel Energy's plan could be another poorly thought-out climate solution. Since learning about the project, she has contacted multiple appliance installers and manufacturers to ask about the risks of hydrogen blending. She found most warned the idea wasn't safe and could void the warranties covering appliances like furnaces, stoves and water heaters. 

“I have an old dryer,” she said. “Is it meant for hydrogen? No.” 

To her frustration, she said the company hasn't addressed her concerns in detail, only offering standardized responses. 

"Just show me the data. Not just a one-page flyer saying you’ll be safe," Shoener said.

Editor's note: This story has been updated to correct a figure from a state report on hydrogen blending. A newer version of the state report found a 5 percent hydrogen blend would lead to a 1.5 percent cut in climate-warming gases compared to methane, not a 3 percent cut.