In the wake of Hurricane Beryl, after millions of Houstonians lost power and at least 36 people died, many of them because they didn’t have AC in the heat following the storm, Texans were once again left with many of the same questions we’ve been asking for the past decade. How do we make sure that the power stays on when a storm hits, or disaster strikes? How can our state, rich in all its energy resources, have its electric grid so badly pummeled by a Category 1 storm? When we are faced with the next storm, hurricane, or cold snap, how will we make sure things are different? How can we keep critical facilities powered, vulnerable residents safe, and generally ensure a reliable and resilient grid?
For CenterPoint, the utility serving most of the Houston area, the response so far has been a plan to purchase additional generators. This approach has been met with considerable skepticism, given that CenterPoint had already spent $800 million on generators that proved unusable during Beryl — a cost that continues to be borne by their customers.
However, there are alternative solutions that can enhance community resilience without breaking the bank. One of the most promising is microgrids. Microgrids consist of interconnected resources like solar panels, gas generators, and batteries that connect directly to homes, facilities, and other sites, allowing them to operate independently from the main grid. Microgrids have been deployed across the state, including in Houston, and customers with microgrids during Beryl had drastically different experiences than others in the city and the region.
To learn more about microgrids, and understand how they can help save lives and maintain stability in future storms, I spoke to Allan Schurr, the COO of Enchanted Rock, which has been deploying microgrids for almost 20 years. 100% of Enchanted Rock’s microgrids that were tasked with providing power during the Beryl aftermath were able to do so, including their microgrids at H-E-B stores and distribution centers, which helped ensure many Texans had access to air conditioning, food, and supplies.
Allan and I dug in how Enchanted Rock’s microgrids work and what types of customers are currently served by them. We talked about how microgrids can and should be deployed at nursing homes, hospitals and other critical facilities; why the company chose to switch to natural gas generators instead of diesel fuel; the impact of state legislation on microgrid deployment; and how utilities can make it easier for all types of customers to get microgrids.
This one is part of a larger series I am doing on the aftermath of Hurricane Beryl focused on microgrids. In the next few weeks, we’ll be releasing short episodes (like this one) interviewing folks working on solar microgrids and storage, understanding the impact of natural disasters on marginalized communities, the importance of DERs, and more.
Thank you for being a listener and don’t forget to like, share, and leave a five star review wherever you listen to podcasts.
Timestamps
3:48 - How Enchanted Rock got started
6:14 - What is a microgrid? How does it work?
9:12 - Enchanted Rock’s partnership with H-E-B and benefits to the community
12:14 - Nursing homes
13:07 - Other types of clients that benefit from microgrids
14:44 -Generators vs microgrid and Texas Energy Fund legislation for microgrids
22:04 - Benefits of microgrids to the overall grid; microgrids as part of Virtual Power Plants
26:03 - Winter Storm Uri and Enchanted Rock
28:45 - Accessing gas for microgrids during severe winter weather or storms
31:15 - Can you have resilience without microgrids?
33:53 - How can utilities make it easier for customers to get microgrids
35:42 - Enchanted Rock’s Bridge-to-Grid program and microgrids at data centers
Show Notes
Enchanted Rock’s Bridge-to-Grid program
What’s in a name? Preparing for long-duration outages from “anonymous” storms by Allan Schurr
Houston’s post-Beryl outages highlight benefits of distributed energy from Canary Media
After Hurricane Beryl, Microgrid-Equipped Grocery Stores and Homes Weathered Outages for More Than a Week in Houston from Microgrid Knowledge
CenterPoint spent $800M on mobile generators. Where are they post-Hurricane Beryl? - from the Houston Chronicle
Transcript
Doug Lewin
Allan Schurr of Enchanted Rock, welcome to the Energy Capital Podcast.
Allan Schurr
Boy, it's great to be on and nice to see you again.
Doug Lewin
Good to see you again as well. Obviously been following Enchanted Rock for a lot of years now. When did you guys start? It's more than 10 years now, right?
Allan Schurr
Well, more than 10 years, yeah. We really got into this business of resilience in 2009. So we're 15 years in and we've learned a lot along the way, but it's exciting where we're at now.
Doug Lewin
Was there like a formative, that was right after Hurricane Ike? Was there something that really spurred it or had this kind of been building for a while and 2009 just happened to be the year it started?
Allan Schurr
Well, Hurricane Ike was kind of the catalyst for doing what we do today because as you may recall, Ike really impacted the city of Houston, the water infrastructure and the city was very close to being lost in terms of the power reliability caused them very close to losing that entire water operation and so that created a demonstrated need and our founder, Thomas McAndrew, in partnership with NRG, started working with the City of Houston, building backup power systems, at that time using diesel generators, but with a more modular design, a little smarter operations mode. And from there, we started adding more sites. We added more market-facing operations. And in 2014, decided that we needed to pivot, a cleaner solution that also had the benefit of the underground fuel delivery network of natural gas. And so we engineered and designed a proprietary gas engine for backup power that we're still using. We're on about the 10th version of it, but we're using that same exact approach today and now have over 1,500 of these generators in the market.
Doug Lewin
Amazing, so we'll dig into all of that. So interesting, it started after Ike, obviously we're recording, you know, summer 2024, a couple weeks after Hurricane Beryl has come through Houston, a couple months after the derecho, which also caused massive outages in Houston. So two major hits just in the last couple of months.
You wrote a little piece on LinkedIn. We'll link to it in the show notes and folks should definitely follow Allan and all things Enchanted Rock. But you wrote there, “It's no longer about preparing for the possibility of long duration outages from severe weather year round. It's about preparing for the inevitable.”
So this is really kind of built into the DNA of the company that these long duration outages are going to happen and microgrids are a core solution. Let's start with, if you don't mind, kind of an expansive definition of what are microgrids? Why are they so important? And then as we go through the conversation, we'll narrow down to what exactly Enchanted Rock is doing. But I think it's good to levelset because people use that word a lot and it means a lot of different things to a lot of different people. So I think definitions matter here.
Allan Schurr
Yeah, a microgrid is a self-contained, geographically contained boundary that can be supplied from energy resources within that boundary in the case that it needs to island from the grid. So it is a little mini-grid, it's a little micro utility, and it is set up in such a way that it can operate when the grid is down. It can separate from the grid and carry necessary loads, all the loads, for as long as is needed until the grid is available again. And if you follow the DOE definition, it also means that it's grid aware so that when the grid is connected, it also can provide some level of support to the wider grid.
So that definition, of course, with the backdrop of Beryl, means that customers that have microgrids should be able to operate normally for the duration of any power interruption from the grid. And I think maybe just keying off the long duration statement. Long duration means what, really, is also a design question. Is long duration enough for you to evacuate patients from a hospital or is long duration so that you don't have to evacuate patients from a hospital? Those kinds of examples and we know from experience having started working with diesel back-up generation, that during real emergencies it's very difficult to get refueled. And so long duration is really what you expect an outage can be and comparing that to the ability to store fuel on site or have enough self-sustaining resources on site that you don't need refueling. That's what we mean by long duration, being prepared for those very long periods where something happens that you weren't necessarily expecting, but in fact they compound often in emergencies, things get difficult. So we, with Beryl, we had customers that were out for 11 days. And it was long past the ability to get refueling after 24 hours of fuel is used.
Doug Lewin
Yeah, so that that islanding piece is really kind of the key. And I think, you know, we have a lot of, you know, different kinds of listeners this podcast, definitely energy professionals, and some are kind of newer to this and want to understand that better. But really, it is what it sounds like, right? You have the ability to continue to have power within a defined area beyond when the grid goes down.
You guys have, I believe I read, I think it was either in, and we’ll will link to various articles about Enchanted Rock, it was either in Microgrid Knowledge, or Canary, both had good articles about y 'all recently, but one of them had that you guys have 155 sites in Houston, something like 95% of those stayed up throughout Beryl the entire time.
You guys have a number of different clients, but obviously one of your sort of marquee or signature clients is H-E-B. And it's very interesting that, you know, Texans have come to view H-E-B sort of as a resilience center. They know when the, pardon my French, proverbial shit hits the fan, they can go to H-E-B and it's going to have air conditioning. Their food is going to be there. And you guys are a huge part of that story. Can you talk a little bit about that relationship?
And I'm also just interested in who some of the other, you don't have to name names if they don't want to be named, but what are some of the other kinds of clients you're working with, grocery stores, but are you working with hospitals? Are you working with, you know, water treatment facilities, assisted living centers? What other kinds of facilities are you working with?
Allan Schurr
Right, right. And let me just say that we have 155 microgrids in the Houston area. 146 of them were asked to be operated for outage purposes. So there were nine of our microgrids that were, the grid was still up. We operated at 100% of the microgrids where we were asked to provide backup power, so
Doug Lewin
Thanks for that correction because that's a really important correction. I know you guys take a lot of pride in having a hundred percent. So I get it. Yeah.
Allan Schurr
We do, and I think it's important to note that when people want to pay for resilience that they get it. And it's difficult to actually ascertain what the level of performance is from so many different options that are out there. But we think that being able to provide that level of continuity of service allows companies like H-E-B, as an example, and I'll talk about some of the other customer types that we support, it lets them count on the fact that power will always be there. And indeed what HEB used to try to, this is dating back probably nearing 10 years ago. They had a fleet of mobile diesel generators that they would try to roll around the state looking for where to be when the storm hit. And so they had to be both weather forecasters, they had to be logistics experts, which they are, and then they had to be lucky that they hit the right locations. And if you think about Beryl, Beryl was supposed to go ashore at Brownsville and then three days later it was in Houston. It's difficult. And Hannah was very similar to that a few years back.
So it's very difficult to move equipment around during emergencies. Often those emergencies are causing road closures and other things. So H-E-B can now count on the fact that they'll have continuous operations of power and that lets them run their business a little differently. Yes, the branding of we're there for the community is part of their DNA, but it also lets them push perishables out to their stores rather than hoard them at their distribution centers and then move to the stores that have power. They don't have to work, deal with that level of complexity. So they can continue to operate as normal and even forward stage some of those perishables at their store locations. That lets them be more responsive to their community.
We do serve other grocery stores that have a similar interest in being known as a community resource center, but we also do assisted living facilities. Hospitals. You know assisted living facilities requirement for life safety does not include air conditioning. So you might be able to keep the lights on…
Doug Lewin
Wait, wait, hold on, hold on. Okay, wait, so there's a definition in some standard for assisted living centers or something? What are you referring to that doesn't include air conditioning?
Allan Schurr
Yes, there's actually an NFPA standard for life safety. Backup generators have to be on site, but they don't have to cover the entire load of the facility. They have to cover things like elevators and emergency exit lighting and things of that sort. But having full backup that a microgrid can provide lets them just maintain operations and not evacuate patients. Heat's really a problem, right? When you're sheltering in place and the air conditioner goes off.
Doug Lewin
Yes, particularly at an assisted living facility or nursing home, right? I mean, heat is literally a killer. I mean, it can kill anybody, but certainly, elderly people are at a very high level of risk.
Allan Schurr
Yeah. That's right. Right. So healthcare is generally that. Most healthcare standards don't require full facility backup. It's partial. And we have a hospital customer that they had to evacuate patients during Harvey because they lost power. And while their emergency generators worked for a while, they really needed to remove the most critically ill patients for other locations. That's not healthy for the patient. So a microgrid can solve that problem.
Water pumping. Water facilities. If we remember out of Uri, there was a lot of power outages and water supplies were compromised so boil water notices occurred. I think I read that there were more water outages than there were power outages in Texas during Uri. So water is another one of those critical infrastructures.
We've got some manufacturing customers, some that make food products that need refrigeration. We have a chemical plant out in in Baytown area. They have environmental releases if they have power outages that cause their process to be interrupted artificially. And by having a microgrid, they can avoid those releases and indeed they can continue to operate. It takes them sometimes over a week to recover from an outage.
And I can give many, many stories of the kinds of things that are obvious and then some non-obvious ones too that customers that just have a very high consequence of having power outages and microgrids address that so that they don't have to worry about it. They can maintain their operation, can maintain the safety and quality of their products, they can serve their customers better whether they're shoppers or patients or others.
Doug Lewin
You know, it's very interesting that you said that, you know, in the very early days, more than 10 years ago, H-E-B was rolling mobile generators around, because it seems like, and I'll get into a little bit of commentary, and you don't have to endorse, or you could certainly push back if you don't agree, a lot of the things that I…
Allan Schurr
I know where you're going.
Doug Lewin
Well, look, I mean, so this is a very live issue, right? There was an article, again, we'll link to this in the show notes, with a gift link. Great article by Neena Satija and Mike Morris of the Houston Chronicle about the mobile generators that CenterPoint has purchased. They spent $800 million on them. The day we're recording on July 25th, there was a PUC hearing today. The PUC seems to think that maybe doing more generators, but as long as they're small would be better.
But even if they're small, even if they could be used, unlike the big 32 megawatt ones that cost most of the money that they couldn't use post Beryl, even if they get smaller ones, how long does it take to actually get those generators there? How many of the needed, you know, when 80% of your service territory, if your CenterPoint, was without power post-Beryl, how do you pick and choose which assisted living center and which nursing home and which water treatment plant, get a small generator? And then on top of that, that's rate payer dollars that are only being used on the few days out of the year when there is an emergency, whereas your systems are already on site. So the minute there's a problem and there's an outage… like not even a minute that's inaccurate, right? I mean like the second, the sub-second that there's an outage it kicks on, it's immediate, and you can actually be generating power reducing electric bills all through the year. So I just think I think it's very interesting that there's a parallel there that like H-E-B learned this lesson ten years ago but it seems like the state might still be learning it now. I
'll let you comment on that, I'll turn this into a question. The state did pass what I think is a pretty groundbreaking policy during the last session, it was Senate Bill 2627. It put money towards big central station gas plants, but also had funding for microgrids at critical facilities. Now that's a little different because you guys are focused on gas. This mandates a mix of solar storage and gas . Is this something you're tracking? Do you think that that is a policy that can really make a difference to add reliability and resilience to the state? You know, do you think it needs any changes? What are your thoughts about this sort of… I think there are kind of two different ways to go. One is these kind of mobile generators that seem pretty unwieldy and difficult and lead to all sorts of difficult decisions versus the kind of on-site generation that's there year round that's in the Texas Energy Fund.
Allan Schurr
Yeah, there's a lot to unpack as they say in that question. First of all, I think it's important to say that all of the debate that's going on now post-Beryl, it's healthy to realize that the grid does take a hit and can't be at the level of reliability that certain customers need. And no matter what you do with tree trimming and other moves, there still is vulnerability with above ground infrastructure and even below ground infrastructure. Having local generation at the site of critical infrastructure, I think we agree on that as a necessary aspect of maintaining the operations of those customers, whatever they are. Then the question is, how's the best way to do that?
Mobile generators have historically been used for those kinds of applications. They're also used for construction power and other things that are clearly temporary applications. But it's hard to say that in coastal Texas that it's a temporary risk of having an outage. It's a long-term risk because it can happen from a variety of storms, not just hurricanes, but the derecho and other severe weather. So it's a long-term risk that maybe demands a longer-term solution. And you throw in the logistics challenge of moving mobile generators around. And it really should be the exception not the rule for critical infrastructure where there's something that was not anticipated and it needs a quick fix. Just the manpower of moving during an emergency this equipment, connecting it, testing it, takes time. It could be hours or even days before it can be made safe to move that kind of equipment around.
Doug Lewin
And then having enough diesel to actually, to your point earlier, right, I mean, having enough diesel to go for days and days like that is a major issue as well.
Allan Schurr
So I think it's deficient for the kinds of infrastructure that knows there's a long-term risk to their operation in Texas or anywhere for that matter. So a permanent microgrid does start up immediately and it can run indefinitely. And the benefits of that are many. It actually helps utilities have a much more orderly way of restoring power. They don't have to worry about a particular customer that didn't have a backup generator that is pleading for some assistance from the utility. Because that customer is protected and the utility will know that they're protected and they can go about their business of restoring the most customers the fastest, rather than a few customers that might divert resources. That's healthy for the grid restoration process.
It should not be on the utility to provide resilience to every customer at the level that some of those customers need. I think that those that recognize they have that need really have an obligation to investigate solutions. And that's what the state incentive program was really designed around. It was to assist those businesses, those organizations, to find a solution.
It does require a number of conditions to be met that I think at this time it might make sense to modify that legislation for at least the coastal areas where the risks are the highest. And honestly, adding solar and storage, while it's an admirable goal, doesn't really add to the resilience of a site. If you need generation, you can never count on the fact that an outage will happen with the battery charged if you're using it for other reasons. And even if you're not, it's very expensive to add solar and storage and generation, when generation can be the lowest cost approach, so we're advocating some modifications for a temporary period of time and only near coastal risk areas where that monies can be modified to be accelerated in their deployment in a much simpler way. And we could cover a lot of critical infrastructure with the dollars that were allocated in that program. And so we're hopeful that there will be some opportunity to advocate for that change. And I think many of the at-risk facilities that are critical infrastructure could very well in the next year be much more prepared for these long duration outages and that are again a persistent risk of being in Texas.
Doug Lewin
Yeah, very interesting. A lot to go into there too. I do though want to ask you some, and I know you can't get into like great, gory detail on your business model. Effectively, this is kind of a resilience as a service kind of a product. That's how I would describe it. I don't know, you could describe it differently, obviously, if you want to. But it's kind of this resilience as a service where you're paying for the resilience but some of the cost is lower because the assets are actually participating in the market. So you guys are actually earning some ancillary service revenues, but a lot of discussion. I've covered it in my newsletter a lot about the cost of ancillary services. So that's another benefit that microgrids as opposed to things like, not to beat up too much on mobile generators, but like any number of different solutions don't sort of check all the boxes that microgrids do. Right? So another one is and contribute to ancillary services. But then also your customers are getting some benefits by reducing their energy use, reducing even their four coincident peak charges, right? Their transmission charges. So there's sort of all these different benefits that come in. Can you just, again, without getting into too much about your specific business model, but that kind of notion of resilience as a service with the cost brought down by some of the revenues from the market?
Allan Schurr
Yeah, I think that the business model idea of exactly where is the revenue and where are the benefits, how do the costs get allocated to different parties, that varies by customer in some cases. But let me just talk about the function of the microgrid. A microgrid, once it's there for that island function, it's an available resource that can help the grid when the grid is tight. And it should be wired up that way so that it is ready to support the grid conditions require it. And you might argue, well there's not very much of an impact by doing that. But, we at Enchanted Rock, we're up to a gigawatt of contracted or installed projects. And a gigawatt is a material impact on the grid.
Doug Lewin
Allan, is that just in Texas or is that across a broader geography?
Allan Schurr
It's across more states than that, but I think the Texas portion of that's probably over 600 megawatts.
Doug Lewin
I mean, that's a, yeah, that is a very large amount because you, and this really sort of gets to that notion of a virtual power plant, right? As you guys have all of these smaller sources, but you add them up, it's a big number.
Allan Schurr
Yeah, I like to call it an aggregated power plant because there's nothing virtual about it. It's a power plant, just lots of them, and they're very responsive. And in the end, they're a lot more reliable because you're not dependent on a single big unit to perform in supporting of the grid. We have many that are geographically diverse. And because they are first offsetting local customer load, we don't even have transmission constraints that are required in order to overcome in order to get that power to market, it starts in the market because it's displacing customer load. So it should be an important part of the grid resilience features that any grid operator looks to. And I believe ERCOT is happy with having a growing portfolio of distributed resources, not just central plants where the risk is a little bit higher. The costs, in fact, are even more competitive because we have two customers paying for that asset. We have resilience customer that needs backup power that's willing to pay their share of that. But then the grid is also willing to pay for those services. And when combined, they both get a better deal. So what could be better than it's a more reliable asset that is cheaper than the traditional approach and it's even cleaner because it's natural gas, not diesel backup. There's many benefits. And we think that this model over time is going to change the architecture of the grid where we rely a lot more on distributed generation for additional resource capacity because some industries need to have this resilience experience and so they're willing to compensate those assets for that function.
Doug Lewin
Makes a lot of sense. So I also want to make sure we talk a little bit about the Winter Storm Uri experience. We've obviously talked about a little bit about the derecho and the recent hurricane. But obviously Winter Storm Uri was such a sort of apocall, you know, just sort of such an important event in the history of Texas energy. Can you talk a little bit about your experience as Enchanted Rock operating these assets during Winter Storm Uri?
Allan Schurr
Yeah, you know, unlike the hurricanes where there was a lot of physical damage in the distribution loop, where local generation was really critical, Uri, there was not that much physical damage to the grid. The damage, if you call it damage, was really the loss of central power generation. And so with the rotating outages that ensued customers experienced outages, but the lines locally were fine. So we did operate a very significant amount of our fleet during that eight day period. 140 or so of our customers were at some point or another in a rotating outage, a very similar number to what Beryl, Hurricane Beryl had. We had no interruptions to the gas infrastructure. We ran continuously. We had a few instances where the cold temps caused some issues with the generators that we were able to resolve and pick back up. Those generators when they were in rotating outages, were protecting our customers from seeing those rotating outages, be able to deliver their services just like we talked about before. And then when the grid was restored, they were still able to contribute back to the overall energy mix. So we were providing power back to the grid to help alleviate the pressure of additional rotating outages. And again, a microgrid can provide that service back to the grid. And because in our case, we're taking low pressure gas from the LDCs, we didn't see the kind of gas interruptions that happened with the high pressure gas lines and some of the bigger turbines that require high pressure gas. So we were very reliable, extremely good performance, not perfect, but considering the circumstances, we were very happy with it. We've learned a lot since then and gone through our own winterization program since that time. So I think whether it's these system emergencies that can cascade into rotating outages or local damage that needs a significant amount of work to restore power and therefore the duration of the outage can be less determined. Microgrids protect that critical infrastructure and it really I think is the obligation of a lot of those operators to investigate the feasibility of having a microgrid so that they don't become a burden on the grid during those times of restoration. In fact, they can continue to operate as normal.
Doug Lewin
Yeah, it makes a lot of sense. So it's an interesting point, right? The gas plants, a lot of them lost. They had to go offline. Some of them not because they froze, but because they couldn't get gas. And you're saying, but that's high pressure gas. And on the local distribution system, you don't have that. How confident are you that in any kind of event like that, we get some polar vortex, God forbid worse than Winter Storm Uri, you have complete confidence that that local distribution system will continue to deliver gas to the microgrids? Is there any concern about that? Any need for sort of redundancy on site or anything like that?
Allan Schurr
Well, you know, it's both the availability of supply, but it's also how you buy gas. So we, as a reliability provider, we buy firm gas so it is not interruptible. Where a lot of power plants can't afford firm gas, we can afford firm gas because our job, our first customer is our resilience customer. And so when you're buying firm gas, you buy it with the expectation of not being interrupted like other industrials might be or power plant. Where we need to, at larger scale, where we need to buy our own storage, we'll firm it up via bundled product from a shipper that can provide firm gas that way.
So the local distribution gas utilities don't want to curtail gas. It causes significant problems and they generally are therefore extremely reliable and even the Texas Railroad Commission has come out and said, look, if you're supporting human needs, you are a high priority gas customer, even if work curtailments had to occur. So at least in the state of Texas and a lot of other places, firm gas is something you should expect. It doesn't mean that it's guaranteed. Nothing is guaranteed, but it's more reliable and more reliable than trying to get delivery of fuel on over icy roads. We ran into that problem during Uri where the drivers couldn't get to their trucks, the trucks couldn't get across the road, they got to the terminals and the terminals were without power, so they couldn't even fill their trucks. Well, you can see what happens at that point. It's very difficult to manage.
Doug Lewin
Yeah. So I want to ask you two more questions. The first one, you know, keep referring to your customers as resilience customers. And think that's a good sort of like framing and way to think about this. It seems to me like there's a weird sort of disconnect right now where one of the biggest conversations in the state right now and the policy realm is the resiliency plans that the utilities are putting forward. CenterPoint put forward one for two point something billion and Oncor has one for three billion.
They don't include anything related to microgrids. And I'm just wondering again, if like where we started with microgrids with a definition, like what is your sort of working definition of resilience? How is it different from reliability? And could the state really have a resiliency plan that could work without microgrids? Like it seems to me like it's gotta be a pretty foundational part of it. And it's hard for me to conceptualize it not in there. A lot of folks are talking about resilience without it. I'm wondering what your thoughts are.
Allan Schur
Well, I think the state needs to see microgrids as part of its resiliency plan, but whether the utility should be in the resiliency microgrid business is an open question. CenterPoint has proposed a pilot to try to investigate whether a community microgrid, something that could provide permanent support of a geographic area that might be prone to transmission interruptions, as an example. There are these microgrids around the country, we’re doing one in Chicago called the Bronzeville Microgrid. So there may be a role for the TDSPs to support microgrids as part of a resiliency plan, but the state very much should, and they are with the Texas Energy Fund and that resilience grant program. We think some modifications, as I said earlier, would make it a more impactful program and really address the immediacy of needs along the coastal region of Texas.
I think there are utilities around the country that do in fact do microgrids as part of an offering for their customers. We're working with Entergy on that, just over the border in Louisiana. But they're vertically integrated. And so they have a need for dispatchable capacity as well as to serve their local customers.
Doug Lewin
No, that's a that's yeah, that's a really useful distinction, right? And this is one of the problems that a lot of folks and I count myself in this camp have with the problem that a lot of folks have with the utilities owning mobile generators is they're supposed to be poles and wires. Generators are supposed to generate in the Texas market. There’s supposed to be a bright line there.
So maybe the key is in a resiliency plan to like you have a portion of it that's about their capital expenditures they earn a rate of return on. And then there's a portion of it… so that would be things like replacing their wooden poles with composite poles and things like that. And then there's a part that is not a rate of return, tree trimming, but like in there, right next to tree trimming, should be helping customers that want to have generators get interconnected quickly and things like that. What is the utility role not in, in Texas, it’s not going to be owning the microgrid except in some rare circumstances, but what is the role of the utility to facilitate that? Is there something the utility can do to make this easier for customers?
Allan Schurr
They sure can. Being able to facilitate the interconnection process in an orderly and speedy fashion would help a lot too. There are expenses associated with interconnecting that might make sense for the utility to put in rate-base because they support many microgrids or many distributed energy customers. So there's a little of that conversation that's happening too. But, by and large, the market mechanisms in ERCOT exist to make resilience affordable.
And if we can tap into some of this sort of artificial boost money from the state, I think we can have widespread adoption of microgrids. The gas infrastructure is terrific. We haven't had any issues with Beryl. We didn't have any issues with Uri. It is underground and it's really protected from most of the hazards that exist to the electric infrastructure. So we've got this terrific gas infrastructure. We should tap that for resilience. We could see thousands of critical infrastructure businesses and government operations protected so that we can maintain a little bit more semblance of normalcy when we're restoring power for the rest of the masses. And they will get power back faster if there's a priority from the utilities on rapid restoration rather than moving crews from here to there because there's a customer that is not protected. Critical infrastructure is critical. It should be recognized as critical. They should invest in resilience. And there's an affordable option out there with microgrids.
Doug Lewin
Yeah, absolutely. Last question I want to ask you about, was intrigued. There was an article I saw recently, Bridge-to-Grid. This is a data center solution. We're seeing this problem all over the country, including in Texas. There's just these very large demands that are coming on quickly. Maybe we're not able to build enough transmission distribution infrastructure or generation or whatever to be able to support that data center. You guys are actually siting microgrids that can power that data center for a period of time and then once it is grid connected basically provide backup service. Did I get that right? What do you want to add to that? I think this whole AI data center thing is fascinating and it's interesting you guys are playing a role there too.
Allan Schurr
Yeah. Well, the size of these data center requests are so large that it does take time for them to get connected. But that microgrid model that I described, backup power, some level of grid support can also be used for prime power for a period of a few years while they're waiting for that interconnection so that they can get busy on their business. Again, the gas infrastructure in Texas is very robust. We can supply enough gas to do that. Then the data center can start building out on their timeline and then connect to the grid when the grid is available and from that point forward, they enjoy the benefits of a microgrid for backup that again, more reliable than diesel fueled backup generators, which in an emergency, you're not gonna be able to get refilled very easily.
Doug Lewin
Very interesting. Looking forward to learning more about that in the fullness of time. Allan, thanks so much. Is there anything I didn't ask you that you wish that I had? Anything else you'd like to say?
Allan Schurr
No, let's not let this happen. Let's get together again soon. It's been too long since we chatted about these matters. So, looking forward to
Doug Lewin
Great to reconnect, Allan, great to talk with you, and thanks so much for being on the pod.
Allan Schurr
Thanks, Doug.
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