CPS Energy Pilots Hydrogen Tech to Clean Up Natural Gas Without Ditching Infrastructure
San Antonio’s largest utility partners with a Seattle startup to test hydrogen production from natural gas—without CO₂ emissions
July 22 EST: CPS Energy, the municipal utility that powers most of San Antonio, is testing a new way to clean up natural gas and it’s doing it without scrapping the pipes already in the ground. The utility is partnering with Modern Hydrogen, a Seattle-based startup, to break down natural gas into hydrogen and solid carbon, bypassing the traditional combustion process that sends carbon dioxide into the air.
The pilot project, confirmed Monday, will be among the first of its kind at this scale in the U.S. municipal energy sector.
Here’s the pitch: Instead of burning gas and producing emissions, Modern Hydrogen’s system strips out hydrogen for energy use and captures carbon as a solid, not a gas. That solid carbon can then be stored or even used in road construction materials like asphalt. For CPS, the technology offers a way to reduce emissions without replacing entire systems something most utilities can’t afford to do overnight.
No Silver Bullets, But a Useful Step
There’s no shortage of hype around hydrogen in the energy world. But most production methods today are carbon-intensive, and many require massive infrastructure upgrades. This approach is different. It’s not about building green hydrogen factories from scratch. It’s about getting cleaner fuel out of the existing gas supply right at the point of use.
That detail matters in Texas, where natural gas is deeply embedded in both the grid and the economy. “This is a pragmatic step,” said an energy analyst familiar with municipal utility operations. “They’re not betting the farm on hydrogen. They’re testing whether a cleaner form of gas can work in the real world, at a real utility, with real customers.”
What CPS Energy Stands to Gain
CPS serves nearly 1 million electric customers and just under 400,000 gas customers across the San Antonio metro. Its 2023 strategic roadmap, Vision 2027, includes goals to expand renewables, battery storage, and decarbonized gas tech as part of a broader shift away from traditional fuels.
The utility has already committed to a 120-megawatt battery storage project, and it has inked new wind power purchase agreements in recent years. But replacing gas completely isn’t realistic in the near term. That’s why this partnership caught attention it offers a potential way to make gas cleaner, not obsolete.
If the pilot goes well, CPS could roll the technology out further, potentially cutting carbon from its gas service without major infrastructure overhauls.
For Modern Hydrogen, a Foot in the Door
For Modern Hydrogen, this is more than a utility pilot it’s validation. The company has spent the last few years refining its tech, aiming to solve the problem that dogs most hydrogen startups: cost and practicality.
Its system operates at a small scale, designed to be embedded at the customer or utility site, not centralized like traditional gas plants. That gives it flexibility and potentially a faster path to commercial use if the economics hold up.
The bigger question is scale. Solid carbon isn’t as easy to monetize as hydrogen, and utility-scale deployment would require a steady market for that byproduct. Still, for early-stage adoption, being able to store or use the carbon in roads is enough to avoid the worst-case scenario: atmospheric release.
A Broader Market Test
CPS is not alone in trying to thread this needle. Across the U.S., utilities are under growing pressure to cut emissions without hiking rates or compromising reliability. Renewable energy is cheaper than ever 90% of new renewables globally now undercut fossil fuels on price, per Reuters but it doesn’t always match when or how customers use power.
That leaves room for what energy insiders call transition technologies things that aren’t fully green but are far cleaner than the status quo. Hydrogen, done right, fits that bill.
This pilot is a test not just of the tech, but of the appetite. If it works for CPS, other municipal utilities might follow. If it doesn’t deliver on emissions, on cost, or on integration it will be another reminder of how hard the energy transition really is, especially at the ground level.
Not Flashy, But Focused
In energy, flashy often fails. What CPS and Modern Hydrogen are trying isn’t revolutionary it’s iterative. And in a sector that needs real-world answers more than PR wins, that might be the point.
CPS is still early in the process. The utility hasn’t committed to a full rollout, and the long-term economics of solid carbon reuse remain uncertain. But the pilot marks a concrete, measured step toward emissions reduction at a utility where gas still matters and where the stakes for getting it right are high.
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