CPS Energy partners with Bill Gates-backed startup Quidnet on underground energy storage system

CPS Energy said Monday it has reached an agreement with a startup backed by Bill Gates to use water pumped underground as a battery that will store energy longer than the utility’s current battery systems.

The city-owned utility announced a 15-year partnership with Houston-based Quidnet Energy, which uses hydraulic fracturing technology typically used in the oil and gas industry.

But instead of extracting hydrocarbons from shale, Quidnet pumps water into rock deep underground where it is stored at high pressure. Then, when CPS needs extra power on, say, a hot summer day, Quidnet releases water to spin a turbine and generate carbon-free electricity.

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In the first phase of the so-called long-term storage project, CPS and Quidnet will develop a facility capable of storing one megawatt of electricity – enough to power around 200 homes for 10 hours. The 15-year partnership “will provide time for both parties to explore this type of technology,” CPS said in a statement.

“Integrating Quidnet’s Texas energy storage solution allows us to create a cleaner power supply while supporting our local energy industry workforce and reducing costs for our customers,” said CPS acting CEO Rudy Garza said in a statement.

The storage system is “closed-loop,” Quidnet said, meaning it reuses water.

The process is similar to hydroelectric dams that release water to spin turbines, but Quidnet says its technology is less expensive and applicable to more places than a dam.

“Just a few years ago hardly anyone was talking about long-term energy storage. Today, it is one of the fastest growing areas of the energy industry,” said Joe Zhou, CEO of Quidnet. “CPS Energy is leading the way with this groundbreaking project.”

Financial terms of the partnership were not disclosed.

Many Quidnet executives have worked for oil and gas companies and the company says it is “leading the way in the green economy” for professionals in the fossil fuel industry. It says it has secured more than $35 million in funding, including investments from Gates’ Breakthrough Energy Ventures and commodities trading giant Trafigura.

Quidnet has built energy storage sites in Medina and San Saba counties and says it is also developing projects in New York and Alberta, Canada.

CPS has sought to expand its energy storage capacity as it gradually relies more on renewable energy and strives to move away from fossil fuels in the years to come. In theory, energy storage promises to mitigate the inconsistency of wind and sun by storing and distributing energy when the sun is not shining or the wind is not blowing.

From August to October last year – the most recent period for which data is available – about 54% of the electricity produced by CPS came from its natural gas and coal-fired power plants. Eleven percent of the utility’s output came from wind turbines and solar panels.

The only storage CPS currently operates is a 10 megawatt battery system at the Southwest Research Institute, but it can only store electricity for up to one hour. The $16 million project was installed more than two years ago next to a small solar farm.

CPS plans to add an additional 50 megawatts of battery storage through its FlexPower Bundle initiative to expand the utility’s renewable power generation. It’s unclear when CPS will move forward with the bundle; it started soliciting bids from developers to build solar farms and battery arrays more than a year ago.

The city’s 21-member rate advisory committee has been studying CPS generation plans for the future. During a meeting on February 17, Garza described energy storage as a “cutting edge product” that CPS can draw power from for a few hours.

The idea is that CPS would charge batteries or pressurize underground wells using cheap electricity at times, for example, when strong night winds are turning turbines.

Then CPS could offload electricity when demand is highest instead of buying electricity from the wholesale electricity market, where prices fluctuate and buying at the wrong time can be painful for public services. CPS incurred hundreds of millions of dollars in purchased power costs during winter storm Uri.

Energy storage will help reduce what CPS is “exposed to in the market,” Garza said. “It’s a relief during the peak.”

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Bonny J. Streater