Choosing a Power Source
COMPRESSORtech2 – March Issue | By Jack Burke
As the demand for power continues to rise, the need for reliable power sources, especially in remote or infrastructure-limited regions, becomes increasingly critical. The midstream energy sector is often faced with gaps in power availability due to long lead times associated with utility connections. As noted by Ryan Rudnitzki, Senior Vice President of Sales at RPower, the options for bridging these gaps in power needs depend heavily on the specifics of the situation. Although Rudnitzki’s employer, Texas-based RPower, offers a suite of services including design, construction, ownership, operation and maintenance of power generation systems, he said each application is different. “There is no one-size-fits all solution. The best option for meeting your power needs really depends on the individual circumstances,” Rudnitzki said during a presentation at the Gas Machinery Conference (GMC) 2024 in Houston. Rudnitzki’s presentation, “Waiting on Wires – How the electrification of our industry is affecting projects and what options exist to meet desired demands” looked at options and challenges of electrifying operations in the natural gas industry.
Current power generation trends
Rudnitzki emphasized that the current power landscape has seen demand growth stagnate over the past couple of decades. driven in part by efficiencies in power usage, despite increasing electronic and digital consumption. However, new factors, including the electrification of industries and the rise of data centers are pushing demand higher. “With the electrify everything movement, and data centers growing, demand is expected to rise significantly.” he said. One of the major contributors to this demand increase is the rapid growth of artificial intelligence (Al) and cloud computing, which heavily rely on data centers. According to Rudnitzki, more extreme forecasts suggest that power demand could theoretically double over the next five years, although challenges including grid capacity constraints and efficiency gains will likely prevent such a rapid increase. Simultaneously, the power mix is shifting. “In the first half of the year, 70% of new power generation came from wind and solar,” he pointed out. Alongside growth in battery storage. Despite this, the intermittency of renewable power sources and the need for dispatchable power have highlighted the continued importance of natural gas. Rudnitzki noted that natural gas remains a crucial part of the energy mix, particularly in Texas, where significant incentives are pushing for more natural gas generation to firm up the grid.
Challenges in power supply: A Texas case study
A significant challenge in power availability is the mismatch between demand and the pace at which utilities can provide new connections. Rudnitzki presented a hypothetical scenario in which a midstream company needs power for a new processing plant but is faced with a multi-year wait for utility connections. As Rudnitzki said, “A midstream company might request power from the utility, but the utility could be unable to provide it until 2030, resulting in a delay of several years before the plant can be operational.” This gap, which initially might cause an additional 18-month delay to an expected 18-month project schedule, is often extending far longer due to systemic issues and increased power demand, particularly in areas like Texas. In these cases, midstream companies must consider alternative power solutions, as traditional utilities cannot meet the timeframes required. Rudnitzki’s experience with these companies highlights the growing concern: “It’s not just about needing power-it’s also about avoiding sending your producer a higher monthly power bill compared to your competitor,” he said.
Power options for bridging the gap
To meet power demands in the face of delays, midstream companies have several options, which Rudnitzki categorized into three basic approaches:
1. Engine driven equipment. Using natural gas engine-driven compression equipment is a common solution when companies face limited or delayed access to electricity. This approach is particularly appealing when natural gas is readily available onsite. Rudnitzki said that. “If you already have to put power into the facility, it’s sometimes more cost-effective to fully electrify the facility, consuming 30 MW instead of just 15 MW. However. if the local substation can only support 15MW of power, you may opt for engine driven compressors to avoid needing additional on-site power generation”
2. Rental power generation equipment. Rental power is an effective solution for bridging the power gap for shorter periods. Rudnitzki described this as an option suitable for temporary power needs: “Rental power equipment is ideal when you need a quick solution for the short term.”
3. Microgrids. As the duration of the power gap extends, microgrids become a more economically viable solution. “The economics of microgrids make more sense when you’re looking at bridging power gaps of three, four, or more years,” Rudnitzki noted. Microgrids are typically a longer-term turnkey installation. integrating power generation assets. switchgear and (if necessary) transformers.
Microgrids: A longer-term solution
Microgrids are increasingly being considered as a robust solution to power gaps in energy-intensive industries, especially those requiring consistent. reliable power. While the initial cost of building a microgrid may seem high compared to renting or using engine-driven equipment, the long-term benefits can outweigh these costs in situations where bridging a power gap could take years. “The economics of microgrids start to make more sense when you’re looking at three to five years of temporary power needs.” Rudnitzki said. He highlighted that the integration of renewable energy sources. battery storage, and local power generation provides an added layer of security, reducing the dependency on traditional utilities and mitigating risks associated with power volatility.
Challenges in power availability and scheduling
A key issue that companies face is the inability to access power on time often due to long wait times for utilities to review and approve power requests. As Rudnitzki put it, “It’s not so much that there’s not necessarily power there; certainly, there are often power shortages. But what also can happen is that there’s such a long line for these utility companies to even review the request, you might wait a year before anything gets looked at from the time that you submit. So even if there is power available, you’re waiting a while for an answer.”
Once an interconnection request is reviewed, utilities often find that they need to install specific equipment to ensure the safe and stable distribution of power. This equipment may include transformers, switches, reclosers, and breakers, each of which can face significant lead times due to supply chain issues, with some utilities struggling to install everything on time due to workforce limitations. In the face of such delays, companies often need to reconsider their expectations. “People expected certain interconnect lead times based on past experience, and they’re learning that they can’t just plug the cord in the wall and expect there to be power,” Rudnitzki said. As a result, businesses must explore alternative power solutions to bridge gaps until their grid connection is finalized.
Engine-driven compression to reduce electricity demand
One potential solution for companies in need of immediate power is the use of engine-driven compressors. Rudnitzki highlighted the role of engine-drives for inlet and or residue compression needs could reduce customer demand for grid-based power. This approach could be particularly beneficial in regions where grid infrastructure is not reliable. An additional benefit of engine-driven solutions, particularly for gas companies, is that they are often fully hedged. As Rudnitzki points out, “The gas used to power the compression equipment just gets passed back to the producer. And if the producer is paying a lot for gas consumption in your facility, they’re also getting a lot of money for their gas in the market, so they don’t care as much.”
However, despite its effectiveness, the gas-powered approach comes with tradeoffs. While gas engines can be efficient, they often have higher emissions compared to electric alternatives. This is especially important in the context of emissions reductions and sustainability goals. “Gas engines are clean, but the grid, especially in Texas, is cleaner from a carbon dioxide equivalent (CO2e) perspective,” Rudnitzki said. Companies that are focused on reducing emissions may find themselves at odds with their goals if they rely too heavily on gas engines. Moreover, gas engines come with higher maintenance requirements and lower availability if not properly maintained. “Engines have a lot going on, and there’s more moving parts than with an electric motor, so it takes more effort to maintain availability,” Rudnitzki said.
Rental generation: A short-term power solution
Another viable option for securing power is rental generation, which is typically used for short-term needs. Rudnitzki describes one solution as “slick” that comes in the form of trailers containing turbines. For smaller footprints, such as those in the Marcellus Shale region, rental turbine based generators can be a highly effective option. “This is a really good solution,” he states, “if you’re talking about customers, say, in the Marcellus, where they don’t have a lot of space period, much less for onsite generation.”
However, rental turbines have some drawbacks. These units are subject to performance degradation at higher altitudes and/or extreme temperatures. Rudnitzki cites a 25% loss in available power when turbines are deployed at higher altitudes and higher temperatures. An additional consideration with turbines is that “the bigger you get into turbines, the better your efficiency typically is,” but if you lose a unit for whatever reason, you lose a lot of capacity all at once. Also, if your site load fluctuates, there may be times where your turbine isn’t loaded close to its design conditions, which can impact service intervals and fuel consumption. An alternative to turbines is reciprocating engine-based generators, which can help with the aforementioned concerns, depending on their design. However, rental rates for engines tend to be higher, they come with more intensive operational and maintenance (O&M) requirements and often require more space for a given power need.
Microgrid solutions: A sustainable, long-term approach
The concept of microgrids presents an innovative solution to power challenges, offering a more permanent, sustainable power infrastructure. Microgrids can be designed to provide backup power not only to the customer but also to the larger grid in many cases. Rudnitzki said, “The idea is basically, you give us gas and we give you power at whatever voltage you want it at. We draw a line around our little plot of land, and gas comes in, power goes out.”
Microgrids are particularly advantageous in deregulated markets such as ERCOT. Where companies can hedge their power prices and avoid the risk of high price spikes, once the grid interconnect arrives. By monitoring real-time pricing, companies can activate their microgrid when power market prices are high, thus controlling overall power costs and mitigating exposure to market volatility.
However, the implementation of a microgrid is not without challenges. It requires significant upfront capital investment – typically ranging from Sl,000 to $2,000 per kilowatt for installation – often making it a less attractive option for short-term needs. Additionally, the operation and maintenance of microgrids require specialized knowledge, which may not be readily available within companies focused on their core operations. These issues can be addressed partnering with a company that will build and lease a turnkey plant that is owned, operated, maintained by a 3rd party (like RPower). In the RPower use case, the environmental permit belongs to the owner of the microgrid, which often avoids aggregation with the permit owned by the customer consuming the power.
Another key benefit of a microgrid is the opportunity to generate revenue through economic dispatch and emergency response services (ERS). For instance, when power prices spike, companies can generate power on-site and sell it back to the grid. Similarly, in markets like ERCOT, participation in programs like the Four Coincident Peak (4CP) program enables companies to offset demand charges by reducing consumption during peak demand periods. As RPower is a Retail Electric Provider and Level 4 Qualified Scheduling Entity in ERCOT with decades of experience in energy management and power generation equipment. The company is well-positioned to optimize the value and availability of generation assets, Rudnitzki said.
Conclusion
As energy demands continue to rise and grid infrastructure struggles to keep pace, oil a gas companies are seeking alternative power solutions. While engine-driven compressors and rental generation units provide short-term fixes, microgrids can offer a sustainable, long-term solution to power reliability and cost management. Despite the challenges associated with upfront costs, operation, and maintenance, microgrids present opportunities for companies to not only secure reliable power but also generate revenue and reduce exposure to market price volatility.
As Rudnitzki puts it, “You’re not just throwing your money away in your rentals because you’re making money in the process.” The evolution of power generation solutions – whether through gas engines, turbines, or microgrids – represents a significant shift toward more decentralized, flexible, and financially viable power infrastructures for industries grappling with the demands of the modern energy landscape.
This article was featured in COMPRESSORtech2’s March 2025 Issue.
