Understanding ERCOT Capacity Forecast Changes

#ERCOT is forecasting electricity demand to surge to 145 GW by 2031, driven by explosive growth from data centers, hydrogen, crypto, and industrial loads (see visuals). But there’s a fundamental issue: Despite this demand wave, there is no price signal to build CCGTs. Solar PPAs are clearing near $40/MWh — flooding the forward curve with cheap power and suppressing the economics for firm gas capacity by at least 1/2 whats needed. As a result, dispatchable CCGTs can't clear financing hurdles, especially with turbine capex rising to $2,000-$3,000 kW and interest rates elevated. And now, with several projects canceled under the Texas Energy Fund (TEF), it’s clear that current incentives aren’t enough to drive investment in reliability assets. #Solar now accounts for 50%+ of daytime generation — up from near-zero in 2021. #ERCOT #TexasEnergy #CCGT #TEF #GridReliability #EnergyTransition #Datacenters #SolarEnergy #DispatchablePower #PowerMarkets

For the first time this year, the energy industry has some federal policy certainty and visibility into what the market will look like for the next several years. Here are some highlights, all of which will result in higher electricity costs for consumers: increasing electricity demand, decreasing supply, more transmission constraints, more price volatility, and higher costs for new generation. The impacts of these dynamics will play out most visibly and the fastest in Texas. This is because of how the ERCOT market invites both load growth and new generation, and because of how quickly both of those can occur. Data centers and electrification are pushing demand higher and later into the evening. The load growth is showing up in chucky blocks that stress local networks. That means bigger ramps, more scarcity intervals, and more value for fast, flexible assets like #batteries. Meanwhile, the economics and supply chain for new #naturalgas keep slipping. #Gas is not showing up, leaving a capacity gap that #energystorage can and will fill. An article this week from the Texas Tribune caught my attention: “Texas’ $7.2 billion loan program for gas power plants has approved two projects in two years.” It reports on the Texas #Energy Fund that was set up in 2023 to incentivize more natural gas plants. The Fund is struggling to deploy capital because 1) the difficulty in procuring turbines (order now for 2029), and 2) the high costs of new plants are adding doubts to their long-term profitability. When you look at projected Capacity, Demand and Reserves in ERCOT from 2026-2030 (see graphic below from ERCOT report), it’s obvious what will happen as reserve margins go negative: #electricity prices are going up and more energy storage is a “must have” to fill in the capacity gaps that are coming. Storage is the only firm capacity that can get built quickly to meet the demand growth. ERCOT’s 2025 peak-demand page (second graphic below) shows record demand for Feb, March, April, and May of this year. Demand may double by 2030. This is part of the reason we (EIP Storage) have been so bullish on the ERCOT market for energy storage and have been developing projects there since 2023. We now have a portfolio of seven (7) 300 MW / 600 MWh projects in ERCOT that are at (or nearing) NTP. They are strategically sited to address long-term constraints and volatility in ERCOT. We have recently started to look to transact on these projects (through dev partnerships, staged transfer, offtake agreements, sale, etc.). Reach out to me directly if these projects may be of interest. See comments for references.

The Texas Data Center Surge: The New Gold Rush? ERCOT ups its 2030 forecast by 40 GW due to AI and Crypto Data Centers This is something that is kind of bonkers, but ERCOT recently had a meeting on April 24th to talk about forecasting and made the statement that they will be upping their 2030 load forecast to 152 GW, which includes 40 GW additional due to crypto and AI data centers. There is somewhere around 5-7 GW of crypto mining load on the grid right now. ERCOT's current record peak is 85 GW. Why is there so much large customer data center load moving into Texas? Governor Abbott has been courting crypto miners after the Chinese government in 2021 pushed them out of the country after making the determination that the amount of energy they were using was damaging their economy. Miners have scattered to the wind, looking for places with cheap electricity and welcoming governments. They have moved to places like Iran, Kazakhstan, and TEXAS. The price of electricity has historically been very low inside of Texas. This is driven in large part due to the tremendous amounts of cheap natural gas in Texas that have been made accessible by fracking technology. In addition, the state has large amounts of wind generation that is sometimes very cheap due to grid congestion and it not coinciding with peak system load (wind blowing at night during low load). ERCOT has been working with large-load customers to compensate them for turning off their loads during system peaks when capacity is low. In 2022 and 2023, crypto miners made more money selling their capacity back to ERCOT than actually mining. The idea behind this is that this will incentivize more generation to be built in the state. Large variable loads will allow peaker generation to see greater utilization. It truly is bonkers what is coming Texas's way. #utilities #texas #ai #datacenters #renewables #ERCOT #energystorage #electricalengineering

ERCOT recently released its updated SSWG cases, and we’ve been diving deep into the data. Some fascinating developments are emerging in terms of how large loads are expected to grow and shift across the region over the next few years: 1. Load Growth Aligned with LTLF (TSP provided Forecast) : System-wide large loads are now projected to reach 208 GW by 2030. This is consistent with ERCOT’s long-term load forecast (TSP provided Forecast). Notably, SSWG cases include both active and inactive loads — not all of the projected load is active , but it paints a clear picture that the not all load forecast ERCOT has can come online with current grid conditions. 2. Major Load Increases in ERCOT West & North : The 2025 case shows similar concentration of large loads in the ERCOT West region, particularly around the Permian Basin. Interestingly, there’s now noticeable growth in the Rest of West region, just south of the Panhandle. Meanwhile, in ERCOT North, earlier growth was focused in Dallas County. But now, new loads are showing up in neighboring counties, suggesting a broader footprint. 3. Load Segregation Trends (2026–2030): In the previous SSWG case, load additions were concentrated in a few key zones. The new case shows a more distributed pattern across ERCOT, indicating a shift toward regional diversification in demand growth. 4. Houston’s Load Is Finally Rising: We’re now seeing a some uptick in large load additions in the Houston area, a trend that could have major implications for congestion. This is due to the fact that historically, Houston hub has traded usually at higher prices compared to any other hub in ERCOT. But with recent addition of Large loads in all other regions, was resulting more price hike in regions with these new loads. Addition, of load in Houston is expected to bring some old charm back.    What This Means for the Market ? The evolving load distribution is likely to shift congestion patterns and alter market dynamics in ways that participants should be aware of. We're actively analyzing these shifts and would be happy to support you in understanding what this means for your assets, operations, and strategy in ERCOT. Let’s connect if you’d like to explore these trends further! Ayush Goel, Patrick Milligan, Anju P, Aradhana Rajaura #ERCOT #SSWG #PowerMarkets #LoadGrowth #EnergyTransition #CongestionAnalysis #ERCOTWest #HoustonEnergy #MarketInsights