Large consumers of power like data centers and manufacturers are driving up local energy demand quickly, CPS Energy officials said during a special board meeting Monday.
These types of customers have requested sizeable blocks of energy over the next 10 years, CPS Energy Director of Business and Economic Development Benjamin Jordan told trustees.
By the end of 2028, CPS Energy estimates it will require roughly 2,700 additional megawatts to address these customers’ demands, he said. By the end of 2033, that estimate jumps to an additional 3,400 megawatts, Jordan added. A megawatt can power 200 homes on a hot Texas day. CPS Energy’s entire portfolio can generate about 7,246 megawatts at a given time.
“This type of customer is going to put a tremendous amount of strain on the generation plan, the portfolio, and in all portions of our business — from legal to engineering, transmission planning, construction, building substations,” Jordan said. “This is large infrastructure that we’re going to be building for these customers.”
These types of customers currently use about 324 megawatts of power at any given moment, roughly equal to the electricity required to power 65,000 residential homes at once, he said. These customers are also asking for low-cost energy that has a zero-carbon impact on the community, Jordan said, adding CPS Energy will have to come up with “some creative solutions” to meet these requests.
President and CEO Rudy Garza assured trustees Monday this growing need is not unique to San Antonio, adding that all major metropolitan areas are experiencing this type of growth in demand driven largely by new data centers and manufacturers.
“CEOs across the sector are talking about how to implement best practices to ensure we’re responsive [to this type of growth],” Garza said. He added that CPS Energy is currently adding about 150 megawatts of new power generation every year.
Another concern utilities have to take into account however is where these large customers want to build, Garza said.
Jordan said it can pose unique challenges to a utility when these types of customers want to build within the same area — forcing the utility to consider how it will get large blocks of power to specific spots on its grid system. That’s the case in San Antonio, where data centers are proliferating on the city’s far West Side, he said.
“We are letting the community know that if they continue to ask us for large amounts of power in the same area we [will] need to start looking in other parts of our service territory to serve large block loads, because it is just going to take us a lot longer to serve in that area,” he said.
He added the utility would like to see more data centers built in the city’s southeast or on the East Side.
Trustee Francine Romero noted the growing demand over the next 10 years will require the utility to drastically rethink its generation portfolio, and asked utility officials how it plans to account for the extra energy needs. Romero added she doesn’t want to see the utility’s promise to make renewables a larger part of its future portfolio fall to the wayside as CPS Energy strives to meet demand.
Jordan noted the construction of some of these data centers haven’t been completed yet, which will give CPS Energy time to adjust its generation plans to meet their energy demands.
“So in this particular juncture, we can identify anything that we need to accelerate,” Jordan said.
The utility’s board approved a new generation portfolio earlier this year that will see the utility phase out coal use by 2028 and add roughly 4,928 megawatts of generation capacity to the utility’s portfolio over the next seven years, including 1,380 megawatts from natural gas and another 800 megawatts from engines that utilize natural gas or diesel to run. Another 500 megawatts will come from wind, 1,180 from solar and 1,060 from lithium battery storage.
Garza added that CPS Energy is creating specific rate structures for data centers and other customers that consume more power. He noted many of them are offering to pay voluntary tariffs that allow them to claim a net-zero carbon footprint, which will “have the net effect of increasing our investment in renewables,” not limiting them.
Board Chairwoman Janie Gonzalez encouraged CPS Energy to start coming up with creative solutions sooner than later, saying the municipally owned utility needs to capitalize on these types of businesses quickly if they don’t want them to manage on their own microgrids, which would mean CPS Energy would lose out on big dollars.
Most of these customers have built-in backup capacity already, Garza said, noting the five data centers already in San Antonio “have the capability to go off-system for a couple, two to three hours to help with conservation efforts to ensure our residents aren’t impacted,” when statewide grid conditions are tight as they were this summer.
Mayor Ron Nirenberg, who serves as one of the utility’s five trustees in his official capacity, said there are partnering opportunities these types of businesses present to San Antonio to potentially help keep the lights on within the city when the state is calling on conservation by also possibly sharing their backup power onto the city’s grid.
“They’ve demonstrated an ability to be great citizens in the community,” he said.
CPS Energy is a financial supporter of the San Antonio Report. For a full list of business members, click here.
