How demand for microgrid power continues to drive Enchanted Rock's growth

Increasing demand for energy solutions, thanks to severe weather events and power-hungry installations such as data centers, means there is a pathway to growth for Enchanted Rock.

Allan Schurr, the company’s chief commercial officer, said in the five years since he joined Enchanted Rock, demand has skyrocketed.

"In the past five years, Enchanted Rock saw demand for its natural gas-powered microgrid solution grow five-fold, with the fastest growth occurring between 2021 and 2022, when demand more than doubled,” Schurr told the Houston Business Journal.

One of the larger deals the company has secured is its partnership with Microsoft (Nasdaq: MSFT). In 2022, Enchanted Rock and Microsoft agreed to a deal that would provide backup power to the software giant’s data center in San Jose, California. This week, Enchanted Rock confirmed a follow-up agreement along with that would procure renewable natural gas for that microgrid.

“After announcing our renewable natural gas solution in 2021 and this particular Microsoft data center project in 2022, we’re proud to be taking this important next step toward seeing this key technology in operation,” said Enchanted Rock CEO Thomas McAndrew in a Dec. 12 news release.

Schurr said data center expansion was a great point for Enchanted Rock to showcase the viability of its microgrids. Data centers demand high amounts of power from electric grids and face permitting requirements depending on the jurisdiction. According to a 2023 report from CBRE, 323.9 megawatts of data center-related demand are under construction in the Dallas-Fort Worth area, and Texas’ Electric Reliability Council of Texas was highlighted as a factor in streamlining development of facilities.

“A large data center three to four years ago was probably a 50 or 60 MW site, and now we're at 10 times that or larger,” Schurr said.

According to Schurr, an explosion in demand for artificial intelligence and other high-demand computing applications have in turn required data centers to grow larger and consume more power.

These demands become harder for traditional grid infrastructure to absorb, resulting in delays for data centers to go online. Enchanted Rock and other businesses providing power solutions can provide power for data centers in the meantime, Schurr said.

In addition to growth in Texas, Schurr said the company was seeing additional growth in other areas like Northern Virginia, which CBRE also highlighted as a data center hotspot. Outside of data centers, Schurr said increasing demand from hospitals and grocery stores in Texas was also driving business demand.

“We started the business here and we have really built a significant amount of competency related to that,” Schurr said.

Enchanted Rock was founded in 2006 and focuses on developing microgrids powered by natural gas and RNG offsets. The company operates a fleet of microgrids for its customers, including H-E-B and retirement homes, installing backup generators that can start and stop quickly, expressly for reliability purposes.

In 2019, the company announced it would open an office in San Francisco, and Schurr confirmed Enchanted Rock is continuing to expand operations in California.

In July 2023, Enchanted Rock made its latest hire for its leadership team, bringing in Josh Shapiro from Willow Park, Texas-based ProFrac Holding Corp. to replace Sanjeev Kumar as CFO. Shapiro is Enchanted Rock’s first C-level hire since Kumar was brought in alongside Jayesh Goyal as chief revenue officer and Paul Froutan as chief technology officer last June.