Sponsored Advertising Feature
Any utility key accounts manager knows that commercial and industrial customers never want their operations disrupted by power outages, which results in lost profits and harms their reputations.
How are some leading public power utilities keeping the lights on during extended grid outages?
CPS Energy, which provides gas and electric service to nearly 1.2 million customers in and around San Antonio, Texas, found a solution through Enchanted Rock, LLC, a Houston-based provider of utility grade backup power.
“As our customers experience potential disruptions to their business, we identified a solution to address the need for enhanced reliability and resiliency,” Rick Luna, interim director of technology and product innovation at CPS Energy, said. The solution was a natural gas microgrid provided by Enchanted Rock.
Power disruptions are on the rise. A 2015 report by the Pew Charitable Trusts found there were 100 major outages a year in the U.S. on average since 2010, compared to just 43 large-scale outages per year between 2000 and 2005. The report pointed to aging grid assets and an increase in the number and intensity of weather events as causes.
Texas has faced its own challenges. The Electric Reliability Council of Texas (ERCOT) in August declared two emergency alerts in one week as the grid operator grappled with a shrinking reserve margin. The reserve margin this summer was 8.6% compared with a target of 13.75%.
Enchanted Rock provides a microgrid-as-a-service that allows businesses to operate normally during a grid outage by providing 99.999% combined reliability and backup generation at 10% to 20% of the cost of a standard backup power system. The company installs a natural gas-fired generator at a customer’s site that can run synchronously with the grid or in islanded mode to generate power autonomously.
“We are a full-service provider for our customers,” Luna says. “We are always looking for solutions to benefit our customers, and we knew there would be an interest for resiliency services.”
CPS Energy decided to develop a two-year pilot program with Enchanted Rock, which owns, installs and operates the generators at the customer’s sites and provides resiliency services at those sites whether the outage lasts 15 minutes or multiple days. CPS Energy pays for the resiliency services and passes the costs along to the customer on their bill.
Before working with CPS Energy, Enchanted Rock had mostly worked in the unregulated power market where distribution and generation is unbundled and customers buy power from retail electric providers. However, as a public power utility, CPS Energy is a vertically-integrated utility operating under a different regulatory structure, and it is extremely important to the Company to maintain a direct relationship with its customers.
Because CPS Energy is a vertically-integrated utility, this transaction resulted from a three-way discussion between the utility, the backup power provider, and the customer. The partnership is a unique one for all involved, and it will serve as a model going forward.
“Its a little bit of a complex situation,” Luna says, but “we are learning a lot from this two-year pilot,” such as how to interconnect the backup generator to the grid, arrange the metering and billing, and structure the energy settlements.
Enchanted Rock uses the combined capacity of the generators at various sites to provide energy to the grid. This gives Enchanted Rock another revenue stream and allows the company to offer its backup services at a lower cost. “We get an additional benefit by selling to the grid, and those benefits accrue to everyone because they help improve the performance of the grid as a whole,” says Allan Schurr, Chief Commercial Officer at Enchanted Rock.
Enchanted Rock’s business model also works to the benefit of utilities, says Schurr. “You can’t expect a utility to upgrade their grid to the demands of their most discerning customers who don’t want to have any outages at all. This gives the utility a different tool.”
To date, Enchanted Rock has worked in places with wholesale power markets, such as Texas, New England, and the PJM Interconnection, where there is a ready market for grid services. However, Enchanted Rock can also work in a more traditionally regulated framework. It is a prospect that “utilities all over the country will find very appealing,” Schurr predicts.
In mid-October 2019, Enchanted Rock announced its expansion into the California market. Enchanted Rock's natural gas resiliency microgrids will be available to large commercial and industrial institutions effective immediately, the company said.
The announcement came the same month that California’s Pacific Gas & Electric implemented a sweeping power shutoff in the face of a wildfire threat.
“The utility landscape is changing,” says CPS Energy’s Luna. “The needs and expectations of customers are changing and this is a unique opportunity for us to bring a new service to our customers. This new resiliency service is another way we’re helping to provide solutions for our customers.”
For more information about Enchanted Rock, visit the company’s website.
