Colorado Classifies Nuclear As Clean Energy. Now What?

A rocky, mountain, way for atomic energy in the Centennial State

The Rocky Mountain Way, is better than the way we had- Joe Walsh, Rocky Mountain Way

On March 31st, 2025, Colorado Governor Jared Polis signed House Bill 25-1040 into law, allowing nuclear power to count as a “clean resource” in meeting the Centennial state’s economy-wide greenhouse gas reduction mandates. These mandates require cutting emissions 26 percent by 2025—relative to 2005—50 percent by 2030, 90 percent by 2040, and 100 percent by 2050.

The legislation marks a notable shift on energy policy for Polis, who campaigned in 2019 on a platform of deriving 100 percent of Colorado’s electricity from wind, solar, and battery storage by 2040, while leaving nuclear off the list of preferred providers.

Photo from Colorado Public Radio

Allowing nuclear power to count as a “clean” resource to meet the state’s emissions reduction mandates is, in theory, good policy, because states that insist on achieving anything close to net zero emissions won’t be able to do it without a reliable resource like nuclear power.

However, significant economic and political hurdles remain when it comes to actually building a new nuclear plant—meaning it’s still going to be a rocky, mountain way for atomic energy in the Centennial state. Sadly, these factors mean there is a good chance that no new reactors will be built anytime soon.

The Road to Legalizing Nuclear in Colorado

Building new nuclear plants has been effectively banned in many states since the 1970s, either through direct legislation or hostile political climates.

But reality is difficult to ignore forever. In the case of Colorado, nuclear power was finally allowed to meet the decarbonization mandates because there is a growing recognition that powering Colorado’s grid with wind, solar, and battery storage is a fantasy.

“Numbers don’t lie,” said Sen. Dylan Roberts, a Democrat from Frisco. “We will never get to 100 percent carbon-free energy with just wind and solar.”

As the old saying goes, success has many fathers, and we’d like to think that we played a role in providing the numbers that ultimately allowed H.B. 25-1040 to pass.

Since 2019, we’ve collaborated on four reports with the Independence Institute (II), a Colorado-based free-market think tank. Most recently, in 2023, we worked with

Jake Fogleman

on three reports showing the massive cost of Colorado’s economy-wide emissions reduction mandates: one examining the cost of a 100 percent by 2040 wind, solar, and battery storage mandate, one on the cost of electrifying home heating, and one on the cost of electrifying transportation in the state.

In each of these reports, we found that no matter how Colorado approached it, decarbonizing Colorado’s electric grid will cost a minimum of tens of billions of dollars. Reducing emissions always comes at a cost. However, we also found that to reach zero greenhouse gas emissions, a grid powered by nuclear power would cost less and be more reliable than a grid powered solely by wind, solar, and batteries.

Now even the Colorado Energy Office seems to agree, though barriers to nuclear still remain.

Economic Hurdles to Nuclear Power

The CEO commissioned a study by Ascend Analytics examining the cost of reaching near-zero or zero carbon dioxide emissions by 2040. The Wind, Solar, and Battery (WSB) scenario in the report was the most expensive of the six zero-emissions scenarios studied. The report notes:

The Wind, Solar, and Battery scenario is 42 percent more expensive than the Economic Deployment scenario. Without firm dispatchable generation, the amount of solar and storage capacity required to maintain reliability drives the cost up substantially. It is the most expensive scenario.

While our very smart readers are almost certainly muttering “Thank you, Captain Obvious,” as recently as 2019, policymakers were quoting unserious studies—like this one from Vibrant Clean Energy—as gospel when they claimed that “deep decarbonization” could be lower cost than the existing grid powered by coal and natural gas.

The CEO report disabuses Coloradans of that notion, indicating that each portfolio—even the so-called “Economic Deployment” scenario—to reduce emissions will cost the state tens of billions of dollars (in discounted dollars, not total).

A report from the Common Sense Institute indicates the preferred “Economic Deployment” scenario will cost over $108 billion by 2050, forcing the average household to spend at least $390 to $504 more annually by 2030 due to rates outpacing inflation and historic trends.

While recognizing the high costs of the WSB scenario is good for atomic energy, the bad news is that the small modular reactor (SMR) nuclear scenario was the second-most expensive option.

The lowest-cost deep decarbonization scenario in the CEO report was one with a substantial buildout of wind, solar, battery storage, while retaining natural gas on the system for reliability, which presents issues for nuclear.

Natural gas vs. nuclear

Using natural gas as the load balancing resource greatly reduces the amount of battery storage needed on the grid, as well as the need to overbuild and curtail wind and solar resources, which is the major driver of cost in a 100 percent wind, solar, and battery storage system.

Herein lies the problem: as long as policymakers are presented a binary choice of wind, solar, and battery storage vs. nuclear power, the grid with nuclear power is the obvious choice for reliability and affordability, even though both decarbonized portfolios will cost billions of dollars.

However, the CEO’s apparent willingness to acknowledge that natural gas is the cheapest way to provide backup power for wind and solar when they don’t show up to work presents a major hurdle for nuclear—because while nuclear is cheaper than running a system on 100 percent wind, solar, and batteries, it is not cheaper than wind, solar, and natural gas.

In other words—if states insist on net-zero, nuclear is the winner. But if states switch to near-zero, the case for nuclear is threatened.

The CEO report didn’t include a scenario looking at nuclear plus natural gas, but that would’ve been an interesting comparison portfolio to see how competitive it would be with the WSB plus natural gas scenario.

Interested with little commitment

In our conversations with people in the utility industry, we’ve heard that investor-owned utilities are interested in learning more about building nuclear power but it doesn’t make sense at its current price point to potentially spend tens of billions of dollars on a project with a long lead time for an incremental 1,100 megawatts (MW) of capacity when other options can be sited faster and at lower capital cost.

Until this changes, the outlook for new nuclear plants appears to be limited to use cases where deep-pocketed tech companies are willing to foot most or all of the bill for the new facility, while more traditional utility players maintain their “wait-and-see” approach to new reactors.

Political Hurdles

As if the economic challenges weren’t enough, it also appears as if Polis is looking to pull the rug out from underneath nuclear power just days after signing H.B. 25-1040 by pushing last-minute legislation to move the 100 percent carbon-free mandate up to 2040, rather than 2050, giving utilities just 15 years to completely eliminate their emissions.

The accelerated timeline almost certainly means nuclear will be left out of meeting the mandates.

As a result, Colorado would continue to pursue the strategy laid out in Xcel Energy’s existing resource plans: build more wind, solar, battery storage, and natural gas as policymakers beat their chests about the greenhouse gas reduction mandates while quietly allowing natural gas to stay online.

If this seems far-fetched, consider that even RMI, formerly the Rocky Mountain Institute—which has long misled policymakers by claiming wind, solar, batteries, and energy efficiency would save consumers money—advocated for using natural gas as a backup source of power for data centers in a February report.

Given the long lead time for nuclear builds and the condensed timeline proposed by Governor Polis, the best Colorado could hope for on the nuclear front would likely be one reactor built by 2040 if they start working toward it immediately.

Conclusion

Allowing nuclear to count toward emissions reduction mandates is a common-sense policy that theoretically improves Colorado’s energy outlook.

Unfortunately, nuclear power is still expensive and presents a financially risky project for a utility industry that is famously risk-averse. Given these realities and the quiet shift toward allowing some natural gas on the system, the legalization of nuclear power for meeting Colorado’s ill-advised emissions reduction goals could be more symbolic than system-changing in the near term.

In the meantime, Colorado will be a microcosm of the energy debate of America writ large. Will they actually force the existing coal plants to shut down by 2031? What will they replace them with? Will these replacements keep the lights on? Will ratepayers be able to afford their power?

For our money, we estimate Colorado ratepayers are in for a rocky road ahead on both the reliability and affordability front.

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