The ERCOT market is more uncertain now than it was a year ago.

That was one of our main takeaways from Infocast’s ERCOT Market Summit last week in Austin.  

A few factors seem to be driving the uncertainty:

• ‍Data Centers: Hyper-Growth or Over-Hyped? Nobody doubts that more data center load is coming to Texas, but exactly how much is an open question. Since many of these data centers represent flexible load (meaning they could adjust their energy usage based on power prices), the lack of consensus on their growth makes forecasting net load much more complicated. ‍
• All Gassed Out? More than 20% of the gas projects chosen to participate in the Texas Energy Fund have been cancelled. As the costs of building gas-fired plants continue to increase, the economic viability of such projects looks increasingly murky. But will renewables + batteries be enough to meet ERCOT’s unprecedented load growth?
• Bullish on BESS. Although 2024 was a disappointing year for BESS revenues (down 70% YoY), folks have a positive outlook for BESS moving forward. The investment case here is that continued load growth combined with the increasing penetration of renewables will cause greater low/high price spreads, which will increase the value of dispatchable resources like BESS. Yet even here the picture isn’t completely clear, as tariffs could hinder the BESS build-out.

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