ERCOT this summer increased its peak load forecast for 2030 by more than 60%, from 90 GW to 148 GW. This was a massive revision; its ERCOT saying that Texas needs to add more capacity than that of the entire country of Italy (~50 GW). The question is: will all this load materialize? Our recent survey suggests that market participants have doubts.

According to ERCOT, several factors justified such a stark re-assessment. Technology companies rapidly pursuing the AI revolution are building power-intensive data centers throughout the country and especially in Texas. The same is true for crypto-mining facilities. And unlike traditional load, these new additions would be “flexible,” meaning they could adjust their energy consumption based on price signals and grid conditions, making them more challenging to model.

If accurate, the higher load projections would have important implications for renewables, especially solar. This is most clearly illustrated by looking at capture rates, which represent the percentage of value that a generation facility, such as solar or wind, is able to "capture" compared to the 24/7 (around-the-clock) value of energy.

Originators have long feared that the saturation of solar would lead to steep declines in solar capture rates, as shown in the low load growth scenario below (the black line). But since ERCOT bumped up its demand forecast, solar capture rates now look like they might hold steady, as shown by the high load growth scenario below (the green line).

Higher solar capture rates would translate into higher solar PPA valuations. According to our Price Tracker, the higher load growth scenario would increase an average solar PPA value by 10%.

But do market participants believe these forecasts? On the one hand, it appears that offtakers have increased their bids for solar to reflect ERCOT’s new forecast. In the chart below, the blue line represents the average solar PPA bid posted to the RenewaFi marketplace over time. Note that since ERCOT’s long-term load growth forecast came out, offtakers seem to be pricing their bids just below the value suggested by the new forecast and slightly above the value suggested by the old one.

On the other hand, we surveyed our LinkedIn followers for their view on the forecasts and uncovered deep skepticism. 40 out of the 50 respondents (80%) thought they were too high. Respondents included originators and traders at BP, Engie, Recurrent, Xcel, Orsted, TC Energy, Solar Proponent, National Grid Renewables, Constellation, DRW, RWE, TotalEnergies, BAML, JERA, esVolta, and Clearway, among other top firms.
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PPAs are notoriously difficult to value and price. Diverging views on load growth are likely making it even harder.

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