So far, Colorado’s data center boom has been almost entirely along the Front Range between Colorado Springs and Boulder County. But could rural Colorado – places like Craig, Fort Morgan, or Pagosa Springs – be part of the next wave?
That question is on the minds of utility leaders who see both opportunity and challenge in bringing this high-powered industry to smaller communities.
Rural co-ops show interest
Tri-State Generation and Transmission Association, Colorado’s second-largest electrical supplier, thinks data centers can find homes in rural areas.
“Absolutely,” said Duane Highley, the CEO for Tri-State, which provides wholesale electricity to 15 electrical cooperatives in Colorado, including La Plata Electric Association, until next April. “Our members have had quite a bit of interest across our entire footprint – not just urban areas.”
A director of Morgan County REA in northeastern Colorado, confirmed queries from four or five data center developers.
Tri-State has already received inquiries totaling four gigawatts of potential demand, compared to its own generating capacity of 2.5 gigawatts. “A lot of them are just shopping,” Highley said, “but some portion of that is real.”
Highley said higher-elevation areas have natural advantages: “Cooler air means less need for cooling a data center.” He cited Craig as an example, noting its strong transmission infrastructure and existing substations. “If anybody wants to start a conversation around Craig, we’ll have the tariff in place to allow that to happen.”
The Westminster-based wholesale provider recently filed a proposal with the Federal Energy Regulatory Commission for a “high-impact load tariff,” or HILT, to attract large industrial users. FERC rejected Tri-State's proposal, but Highley said it was on procedural grounds, and he said Tri-State will refile in early 2026.
LPEA has begun hearing from companies eyeing Southwest Colorado. “We have had significant discussions with three different data center operators,” said Chris Hansen, LPEA’s chief executive. “We’re making sure we are open for business and communicating our opportunities in the next two to five years.”
Developers, he said, are focused on power cost and water availability for cooling, both areas where rural communities can compete. “We believe we can meet those needs in ways that benefit our members and the broader grid.”
Nearby, Delta-Montrose Electric Association has heard “a little bit of interest via upstream providers,” said Kent Blackwell, its chief administrative officer. “The fact that we’ve even heard any this far removed from urban centers is shocking to me.”
Connectivity and clean energy appeal
Modern data centers depend on high-speed fiber, and rural Colorado now has more of it than many realize. Delta-Montrose’s fiber network connects Denver, Salt Lake City, and Albuquerque, while LPEA’s broadband partners continue expanding capacity across La Plata and Archuleta counties.
“The fact that we already have that out here gives us a surprising edge,” Blackwell said.
Tri-State and its members are also promoting renewable generation as part of the draw. Highley said new data centers wouldn’t derail the cooperative’s plan to reach 70% of its electricity from carbon-free sources by 2030. “We can support new loads like data centers with renewables and storage,” he said, “while protecting everyone else from additional costs.”
Slow but real momentum
Developers are exploring projects in the 50- to 100-megawatt range, with potential to grow much larger. Most discussions remain exploratory – “lots of shopping, not much commitment yet,” Hansen said.
But in Colorado, as elsewhere, state leaders fret about getting the balance right. Economic developers see an opportunity that might be realized with new incentives. The environmental community frets over the need for guardrails against unintended consequences. A looming question is whether the data center gold rush will prevent Colorado from achieving its decarbonization goals. This will be a high-profile debate at the Colorado Capitol in 2026.
Across the country, large investor-owned utilities are struggling to meet AI-driven electricity demand even as they want the business – and the revenue. Hansen believes rural co-ops like LPEA can move faster. “We don’t have to go through as many regulatory steps,” he said. “That makes rural areas more attractive.”
For now, the map of U.S. data centers still shows big clusters in Texas and Virginia, but few in the Rockies outside the big cities. That could change soon.
Allen Best produces Big Pivots, which covers energy and water transitions in Colorado. Subscribe at BigPivots.com.
