The OBBBA has introduced massive uncertainty for wind and solar developers, but the prospects for battery storage may be a bright spot. ERCOT, with its price volatility and expected load growth, is an especially attractive market for BESS developers. Indeed, Pexapark’s composite value for a 7-year BESS TB2 contract in ERCOT is up about 20% over the past 12 months.

As of July, BESS projects dominated ERCOT’s interconnection queue, accounting for nearly 178 GW of the over 420 GW of proposed project capacity. While many of these projects will not be built, BESS capacity is still set to reach as much as 50 GW by 2030, up from a prior assumption of 37 GW, according to recently revised assumptions by Pexapark. BESS currently makes up just over 14 GW of capacity on the ERCOT grid.

Wind and solar capacity, by contrast, is assumed to reach just 85 GW by the end of the decade, down from a prior assumption of 102 GW.

That said, while the tax credits for BESS were preserved, the OBBBA imposes stringent sourcing requirements that could pose headwinds for developers, especially given the industry’s heavy reliance on supply chains dominated by China.

Starting in 2026, at least 55% of the total direct costs for the parts and components of a project must come from countries that are not deemed Foreign Entities of Concern (FEOC), including China. This so-called “material assistance” threshold for BESS then rises by 5% increments annually, until reaching 75% in 2030.

For wind and solar projects, the minimum amount of material assistance from non-FEOC nations starts at 40% in 2026, rising by 5% increments annually until reaching 60% in 2030. Notably, projects starting construction before 2026 are exempt from material assistance rules.

One implication of the expected increase in BESS capacity as renewables penetration slows is higher average hourly prices. BESS projects engage in intraday arbitrage, buying cheap power when midday solar generation is abundant and demand is weak, for sale back to the grid when evening demand and prices peak. Through this dynamic, BESS serves as a crucial source of demand during periods of oversupply, preventing power prices from collapsing and in turn stabilizing revenues for all market participants, including wind and solar projects. As more BESS is added to the grid, and its proportion of capacity relative to wind and solar projects grows, its ability to absorb excess solar and wind power and mitigate market imbalances ramps higher.

The boost for BESS holds special significance for ERCOT, where substantial energy curtailments and negative pricing persist because of the state’s massive wind and solar fleet. Renewables account for over 40% of grid capacity and comprised over 30% of power generation supplied last year. BESS capacity on the grid, by contrast, is relatively small at 8%.

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