CPS Energy

Texas Utility Exemplifies Struggle With Surging Demand

April 13, 2024 by Llewellyn King Leave a Comment

Electric utilities are doing something that is equivalent to a person changing clothes without ever getting naked.

They can’t shut down while they switch out old plants for new; they can’t turn off the lights while they retool. They must try to modernize without the communities they serve being affected by so much as a flicker.

What is called “the world’s largest machine” — the coordinated operation of the nation’s 3,000 electric utilities — must hum 24/7 while replacing old polluting plants with new less-polluting plants and adding tranches of renewable power, primarily wind and solar.

I have been watching this feat of changing in place at CPS Energy, the municipally owned electric and natural gas utility in San Antonio. And, I have been following its president and CEO, Rudy D. Garza.

It is a utility with all the stresses now faced by utilities: growing demand, pressure to retire fossil fuel plants and preparing for the onslaught of demand from data centers, driven by the need for more computing for artificial intelligence and other computing needs.

Underlying all of these challenges in San Antonio, as elsewhere, is the need to control the increase in consumer bills. Garza told me with pride that despite the pressures, CPS Energy still has among the lowest electricity rates in the country.

Some in the environmental community may have balked at the company’s recent announcement that the utility was buying two large gas turbine plants in Corpus Christi and one smaller unit used for peaking in Laredo from Talen Energy, which is emerging from bankruptcy. The deal is worth $785 million and will provide CPS Energy with a whopping 1,710 megawatts of power.

Garza told me that CPS Energy will spend additional money on bringing the purchased plants up to its operating standards and preparing them for continuous use. Talen Energy, a power merchant, used them intermittently.

The purchases will enable the utility to shut down so-called steam gas plants. These older gas-fired units don’t use modern, super-efficient turbines but operate like coal-fired plants with a boiler and a lot of wasted heat. Garza said this would reduce air pollution in San Antonio. CPS Energy is also planning to retire coal generation on an accelerated schedule.

Although CPS Energy may not be able to get off of gas entirely, it is a leader in clean energy. It is, Garza said, the largest solar generator in Texas and the second-largest wind user. It has added 50 MW of battery storage and is seeking up to 500 MW of new storage.

Out with the old and in with the new.

This includes the rising electricity demand, which is growing at a rate of 3 percent, and the looming need of data centers. The demand, fed by artificial intelligence, is incalculable and growing exponentially.

Garza said, “The wild card is how quickly these larger loads that are coming to the area get connected to the system. We’ve got eight of these (data centers) on the ground right now in San Antonio with 20 more waiting in the wings.”

Some data centers, Garza said, will need their own backup generation. Although outages are rare on the CPS Energy system, he said the 24/7 needs of the centers are such that the larger ones will have to have their own emergency backup.

CPS Energy isn’t alone in dealing with data centers. It is a challenge faced by utilities nationwide. Rene Haas, CEO of Arm, the UK chip development company, part of Japan’s SoftBank, has described the need for electricity by AI as “insatiable.” A former U.S. secretary of energy told me it is scary and underestimated.

CPS Energy is looking at ways of accommodating the data centers and is at the forefront of new ways of generating. It is collaborating with Joint Base San Antonio — the giant military installation that sits in the center of the CPS Energy service area — to explore the potential for carbon-free solutions. CPS Energy is also looking into geothermal, particularly efficiencies that can be attained with fracking technology, which has changed the oil and gas outlook.

This creativity, which is part of the electric evolution in San Antonio, is taking place across the country. Like changing clothes without getting naked, it is a challenge.

War on the Roof: Solar Power Is Encroaching

March 16, 2014 by White House Chronicle 2 Comments

A warning light is flashing for the nation's electric utilities — and it is getting more persistent.

The utilities, big and small, for- and not-for-profit, are facing serious disruptive technology. The old business models are in danger.

The unlikely disruptive technology that is causing the trouble is rooftop solar power.

Back in the energy turbulent 1970s, solar was a gleam in the eye of environmentalists who dared to dream of renewable energy. It looked like a pipe dream.

Very simple solar had been deployed to heat water in desert homes since indoor plumbing became the norm. Making electricity from the sun was many orders of magnitude more complex and it was, anyway, too expensive.

The technology of photovoltaic cells, which make electricity directly from the sun, needed work; it needed research, and it needed mass manufacturing. Hundreds of millions of dollars later in research and subsidies, the cost of solar cells has fallen and continues to go down.

Today, solar certainly is not a pipe dream: It is looking like a mature industry. It is also a big employer in the installation industry. It is a player, a force in the market.

But solar has created a crisis for the utilities.

In order to incubate solar, and to satisfy solar advocates, Congress said that these “qualifying facilities” should be able not only to generate electricity for homes when the sun is shining, but also to sell back the excess to the local utility. This is called “net metering” and it is at the center of the crisis today — particularly across the Southwest, where solar installations have multiplied and are being added at a feverish rate.

Doyle Beneby, CEO of San Antonio, Texas-based CPS Energy, the largest municipal electric and gas utility in the nation, said, “The homes that are installing solar quickly are the more affluent ones.” The problem here, he explained, is that the utility has to maintain the entire infrastructure of wires and poles and buy back electricity generated by solar in these homes at the highest prevailing rate — often more than power could be bought on the market or generated by the utility.

Steve Mitnik, a utility industry consultant, said that 47 percent of the nation's electric market is residential and the larger, affluent homes — which use a lot of electricity, and generally pay more as consumption rises — are a critically important part of it. Yet these are the ones that are turning to solar generation, and expect to make a profit selling excess production to the grid.

But who pays for the grid? According to CPS Energy's Beneby, and others in the industry, the burden of keeping the system up and running then falls on those who can least afford it.

The self-generating homes still need the grid not only to sell back to but ,more importantly, to buy from when the sun isn't shining and at night.

For some in the utility industry, net metering is just the beginning of a series of emerging problems, including:

Big investments are needed in physical security after the sniper attack last October at PG&E Corp.'s Metcalf transmission substation, which took out 17 huge transformers that provide power to California's Silicon Valley.

New investment is needed in cybersecurity.

Improved response to bad weather is a critical issue, especially in some Mid-Atlantic states.

Beneby believes the solar incursion into the traditional marketplace might be the beginning of more self-generation — such as home-based, micro-gas turbines — and utilities will and must adjust. He is something of a futurist and points out that in telephones, once a purely utility service, disruption has been hugely creative.

Environmentalists are as disturbed as the utilities. Some are calling the imposition of a surcharge on rooftop generators, as in Arizona recently, an attempt by the greedy utilities to stamp out competition. But many are seeking alternative solutions without a war over generating, and without punishing those unable to afford their own generation.

Brian Keane, president of SmartPower, a green-marketing group with solar-purchase programs in Arizona and many other states, has looked for cool heads to prevail on both sides of the issue. “I don't have an answer,” he said, calling for dialogue. Also the Edison Electric Institute, a trade group, has been talking with the Natural Resources Defense Council.

It isn't your father's electric utility anymore, or your hippie's solar power. — For the Hearst-New York Times Syndicate

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