Texas finalizes $1.8B to build solar, battery, and gas-powered…

The microgrid program limits individual projects to no larger than 2.5 megawatts, Lewin said. That’s far smaller than the hundreds of megawatts of capacity that can come from a single gas-fired power plant. But what microgrid projects lack in size they make up for in speed of construction, and many smaller-scale backup power projects will do more to meet demand than big power plants that take five or more years to build, he said. That’s especially true if the microgrids are located at data centers themselves.

To be clear, data centers aren’t the target of the Texas Backup Power Package Program. Instead, the fund is set up to help sites that can’t otherwise afford on-site backup power, explained Joel Yu, senior vice president of policy and external affairs at Enchanted Rock. The Houston-based microgrid operator runs 500 megawatts’ worth of projects at grocery stores, truck stops, and other large power customers in Texas. Enchanted Rock has also deployed gas-fired generators at water utilities and irrigation districts, including Houston’s Northeast Water Purification Plant.

“The $1.8 billion is a huge amount of money, and more ambitious than programs we’ve seen in other jurisdictions,” Yu said. ​“But it’s very much in line with state policy to improve resilience at critical facilities since Winter Storm Uri,” which knocked out power to more than 4.5 million people for up to a week in February 2021, leading to the deaths of an estimated 200 people and more than $100 billion in property damages.

Enchanted Rock’s existing customers tend to be larger entities that can secure financing and clearly quantify the financial value of backup power generation, Yu said. The $1.8 billion microgrid program ​“unlocks opportunities for customers who aren’t as sophisticated, and don’t have the wherewithal to pay that extra cost,” he said.

Assisted living facilities are particularly good candidates for state-funded microgrids, given how deadly power outages can be to older adults or medically compromised people. Alexa Schoeman, deputy of the state’s long-term care ombudsman’s office, told the Public Utility Commission of Texas in a March statement that the more than 80,000 residents of assisted living facilities in the state are at risk from extended power outages, and that ​“operators have cited cost as the reason they are not able to install life-saving backup power at their locations.”

Yu declined to name any customers that Enchanted Rock is working with to take advantage of the fund. ​“But there’s been a lot of interest from critical facilities that might want to make use of this. We’ve talked to folks in nursing homes, assisted living industries, and low-income housing, and other critical infrastructure, trying to get into the program.”

Enchanted Rock has joined other backup generation providers including Bloom Energy, Base Power, Cummins, Generac, Mainspring Energy, and Power Secure in what Yu called an ​“informal group of like-minded companies.” Dubbed Grid Resilience in Texas, or GRIT for short, the coalition is working with the Electric Reliability Council of Texas and the Public Utility Commission on the $1.8 billion microgrid program, he said.

The legislation creating the Texas Backup Power Package Program allows projects to tap up to $500 of state funding per kilowatt of generation capacity installed, and requires solar, batteries, and either fossil gas or propane-fueled generation, Yu said. But it ​“isn’t prescriptive about what proportions are in the mix,” he added.

Different combinations could offer more favorable economics for different types of customers. Some may find that lots of solar panels are useful for lowering day-to-day utility bills, while others may want to maximize gas-fueled generation to cover multiday winter outages, when solar-charged batteries are less useful.

The legislation creating the program does limit projects from actively playing in the grid operator’s market programs, Yu added, meaning microgrid owners will face restrictions on selling the power they generate or the grid-balancing services they can provide to the market.

Still, that ​“does leave some room for customers to leverage the assets for behind-the-meter value,” such as using solar to offset utility power purchases, Yu said. ​“That’s going to be very important to making the economics work.”