CPS Energy’s Microgrid is the Start of Big Plans for the Utility

CPS Energy’s microgrid, its first, is small. But don’t let that fool you. The San Antonio, Texas utility is thinking big.

CPS Energy's microgridLocated at the library of a military base, the microgrid is acting as a learning vehicle for the nation’s largest municipally owned gas and electric utility, a stepping stone toward its vision of a microgrid future.

“We’re very excited about the kind of opportunity microgrids and other distributed resources offer for our customers in the future,” said Frank Almaraz, senior vice president of strategy and commercial operations at CPS Energy.

Customers are beginning to make energy choices, he said. CPS Energy wants to be ready to offer them products and services when they do.

“We want to partner with them rather than obstruct them in making those choices. We think that it is good for our customer, as an end user, but it’s also good for CPS energy. It will mean we will make a smooth and orderly transition to that new future, rather than being pulled along in way that will harm our utility and make us less valuable to our customers,” he said in an interview.

Omnetric Group, a subsidiary of Siemens and Accenture, brought the project to CPS Energy with a $1.7 million grant from the National Renewable Energy Laboratory. Project partners contributed another $3.5 million and CPS Energy provided $950,000.

With 20 kW of solar, a 48-KWh battery, and a Siemens microgrid controller, CPS Energy’s microgrid project serves one of the utility’s larger customers, the Joint Base San Antonio’s Fort Sam Houston. Given that it is a demonstration project, the team decided to install the microgrid in a non-critical military building, the library.

Operating since September, the utility is testing microgrid islanding as well as cutting-edge weather and solar forecasting developed by the University of Texas at San Antonio (UTSA.) Every 15 minutes the system scans the sky for cloud movement, its speed and direction of travel. It then feeds the data to the Siemens and Omnetric Group software sky imager technology, which predicts power generation in near real-time from the microgrid.

“If we know cloud cover is coming, we begin to dispense the battery so that there is not an immediate drop in the PV production,” Almaraz said.

Omnetric Group and Siemens expect the demonstration to advance the integration of renewables and the development of microgrids on a larger scale.

Doing the math on microgrids

Almaraz sees batteries as still too costly for mass deployment, but says that the utility’s roadmap calls for offering customers a range of other distributed energy resources – from on-site generation “to a full-blown microgrid with islanding abilities. And that’s not in the distant future, but in the next couple of years.”

In addition to the military, likely candidates for a CPS Energy microgrid include data centers, hospitals and commercial enterprises. Grocery stores already have approached the utility about installing microgrids.

“They are doing the math on what an outage costs them,” he said.

As a public power utility, CPS Energy enjoys a degree of flexibility in developing microgrids that is not always accorded investor-owned utilities. IOUs typically face stricter regulation and investor demands.

Even so, CPS Energy’s expenditures must serve a public purpose. “We cannot benefit one customer at the cost of everybody else,” he said.

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Hence, like investor-owned utilities, CPS Energy is trying to figure out cost and payment structures when microgrids benefit some, but not all customers. As the argument goes, it’s not fair to recover the cost of these microgrids in electric rates which all pay. So CPS Energy is likely to follow a model that offers microgrids to customers who are willing to pay a little more “to never have their power go down,” he said.

This speaks to a larger industry concern that today’s rate structures are outdated and need reform, he said. “We are in the process of thinking about what a full-on restructuring of our pricing should look like. Obviously, it’s not the kind of thing you can do overnight.”

So for now CPS Energy’s microgrid at Fort Sam Houston offers a toe in the water as the utility considers rate structures and makes other preparation to fully immerse in the distributed energy era.

“We have to continue to innovate if we want to deliver exceptional value to our customers. That’s our goal. It is not technology for technologies sake,” Almaraz said.

CPS Energy’s microgrid is one of several utility projects described in Microgrid Knowledge. We will be reporting about more in our free newsletter.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

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