Energy Capital Podcast "One of the Hottest Data Center Markets in the Country" with CPS Energy's CEO Rudy Garza
San Antonio is one of the fastest growing cities in the country and have requests to interconnect AI infrastructure and data centers that would triple their size. With that growth comes a simple but daunting challenge: how do you keep the air conditioning on while growing the economy and keeping bills affordable?
CPS Energy, the nation’s fifth largest municipally owned utility, sits at the center of this challenge. Rudy Garza, CPS’s president and CEO, has spent the last two decades in Texas energy. In this episode, we talked through retiring old coal units, acquiring 1.7 gigawatts of gas plants, adding renewables and batteries, leveraging demand side resources, and preparing for a wave of new demand from AI data centers.
As Rudy put it, Texas needs it all right now. The question is how to balance affordability, reliability, and growth in a rapidly changing landscape.
A Utility in Transition
CPS Energy serves 1.4 million customers and maintains some of the lowest combined electric and gas rates in Texas. They return hundreds of millions of dollars each year to the city budget, while also managing 6,000 MW of peak demand and a portfolio of about 10,000 MW of generation.
That portfolio is shifting fast. CPS retired its Deely coal units in 2018, is converting one of the Spruce coal units to gas by 2028 while closing the other, and has plans to retire the aging Braunig and Sommers units within five years. These changes create both opportunity and risk. As Rudy said, you cannot run 1960s-era plants forever and expect reliability.
By the numbers
* Customers: ~1.4 million total; ~1.0 million electric, ~0.4 million gas
* Peak demand: roughly 6,000 MW, growing ~150 to 190 MW per year
* Portfolio today: ~8,000 MW dispatchable plus ~2,500 MW renewables
* Recent acquisition: 1,700 MW of gas at roughly $500 per kW versus $2,400 to $2,700 per kW to build new
* Solar: 730 MW contracted or in construction, with another 500 to 600 MW in the pipeline
* Storage: 520 MW secured, tracking toward more than 1,000 MW
* Wind: 400 MW request for proposals in market
* Demand response: about 250 MW per event, split roughly half residential and half commercial
* Customer reality: about 60 percent low to moderate income; CPS targets modest, occasional asks near 5 percent when needed
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