# DOE Awards Colorado $250M Grid Expansion Grant

The U.S. Department of Energy has awarded the Colorado Energy Office a **$250 million** federal grant to support a major electricity transmission project led by Xcel Energy Services Inc. This project aims to expand and modernize the transmission corridor connecting the Western and Eastern power grids, specifically enhancing capacity between Colorado and Texas. The initiative is part of a broader **$1.9 billion** national investment in 31 grid modernization projects across 26 states, designed to improve grid reliability, resilience, and clean energy integration. The Colorado project will increase transmission capacity from 210 to 700 megawatts with potential expansion to 2,000 megawatts, upgrading infrastructure near Lamar and May Valley, Colorado.

- **Key agencies involved:** U.S. Department of Energy (DOE), Colorado Energy Office, Xcel Energy, Public Service Company of Colorado, Southwestern Public Service Company, and Southwest Power Pool
- **Why this matters:** This funding supports critical infrastructure upgrades that enhance interregional electricity transfer, improve grid stability during extreme weather, and facilitate clean energy deployment
- **Procurement implications:** Companies specializing in transmission infrastructure, grid modernization technologies, and energy services should evaluate opportunities to participate in this large-scale, multi-year project
- **Strategic considerations:** The project’s scale and federal backing indicate growing federal investment in energy grid resilience and cross-state connectivity, signaling increased demand for advanced transmission solutions and public-private partnerships in energy infrastructure modernization

**Jurisdictions:** federal, sled
**Industries:** Energy & Utilities
**Topics:** Physical Infrastructure
**Published:** September 25, 2026

### Government Entities
- U.S. Department of Energy (DOE)
- Colorado Energy Office
- State of Colorado
- Southwest Power Pool

### Vendors
- Xcel Energy (prime contractor)
- Xcel Energy Services Inc (prime contractor)
- Public Service Company of Colorado (matching fund provider and system planner)
- Southwestern Public Service Company (matching fund provider and system planner)

### Key Quotes
> Modernizing the Lamar Tie will strengthen the connection between the Western and Eastern electric grids, helping us better serve customers during extreme weather, meet growing energy needs and make the most of affordable energy resources across the region.
> — Robert Kenney, President of Xcel Energy–Colorado

> And what does benefit mean? It means increased reliability and lower rates.
> — Jared Polis, Governor of Colorado

### Sources
- [Colorado receives $250 million for energy grid connection project](https://www.denverpost.com/2026/09/24/colorado-energy-grant-xcel-power-grid) - The Denver Post
- [Colorado to get $250M in federal funding for electricity grid improvements | KiowaCountyPress.net](https://kiowacountypress.net/content/colorado-get-250m-federal-funding-electricity-grid-improvements) - kiowacountypress.net
- [Colorado wins $250 million for grid expansion project](https://coloradobiz.com/colorado-grid-expansion-250-million-federal-funding) - ColoradoBiz