The Electric Reliability Council of Texas (ERCOT) has released a report highlighting the shifting dynamics in energy development in the state, with significant growth in renewable energy capacity, particularly battery storage, but also a concerning trend of cancellations and inactivity among new projects. As of October, ERCOT's interconnection queue holds over 435 GW of potential generation capacity, largely dominated by battery storage and solar power, but project cancellations and setbacks have raised concerns about the state's ability to meet growing energy demands, with industry analysts pointing to declining ancillary service revenue and transmission constraints as major factors.

The data center sector is experiencing rapid expansion in Texas, with over 400 facilities operating across the state, driven by growing demand for cloud services and artificial intelligence. However, this boom poses significant strain on the electrical grid, particularly during extreme cold weather, as a recent report by the North American Electric Reliability Corporation (NERC) warns of increased risk of power shortages, reserve shortages, and outages, highlighting concerns about the feasibility of all planned data center projects, with some estimates suggesting they could consume as much electricity as 154 million Texas homes.

CPS Energy, San Antonio's municipal utility, has issued a request for proposals (RFP) to secure 600 MW of solar power as part of their Vision 2027 plan, aiming to provide affordable and sustainable energy to the region. This move builds on the utility's existing 1 GW of solar capacity, with plans to expand further through additional battery storage initiatives expected later this year. As Texas continues to experience significant growth in renewable energy production, including a surge of over 6,000 MW added in the past year, CPS Energy is well-positioned to capitalize on the trend and drive grid reliability and affordability.

The Electricity Reliability Council of Texas (ERCOT) is facing an unprecedented challenge as data centers and cloud computing facilities rapidly increase their power demands, outpacing traditional grid planning processes. With interconnection requests totaling 205 gigawatts, a fourfold increase from just over a year ago, ERCOT must adjust its strategies to maintain grid reliability and accommodate the concentrated nature of these energy demands, which require power equivalent to that consumed by entire cities.

Experts say the Texas Energy Fund is facing an energy market that makes new power plants more expensive and less profitable.

AI data centers have power demand patterns similar to steel mills, with “very fast, very large ramps,” according to David Penny, director of reliability services for Texas RE. 

Recent statements by President Trump criticizing the expansion of solar and wind power, alleging increased electricity costs and reduced reliability, are contradicted by data from Texas. Texas, a state leading the nation in renewable energy adoption, demonstrates a grid performing at unprecedented levels of reliability while maintaining electricity rates below the national average. The Electric Reliability Council of Texas (ERCOT), responsible for managing the state’s primary power grid, projects only a 0.30% likelihood of rolling blackouts during peak demand this August, a significant improvement from a previous projection of 12% for August 2024. This contrasts with some U.S. grids dependent on fossil fuels, which have faced issues with escalating costs and diminished reliability, directly questioning the basis of Trump’s legislation reducing clean energy subsidies. Texas consumers, both residential and commercial, currently pay approximately 10 cents per kilowatt-hour, representing a 24% reduction compared to the U.S. average, according to the U.S. Energy Information Administration. A key factor in Texas’ grid stability is the rapid deployment of battery storage solutions. Since summer 2024, ERCOT has integrated nearly 5 gigawatts of battery capacity, resulting in a total exceeding 8 gigawatts. These large-scale batteries capture excess energy from wind and solar resources and release it during periods of high demand, alleviating grid stress. Furthermore, an additional 174 gigawatts of storage capacity is slated for interconnection within the next five years. While ERCOT has not directly responded to Trump’s assertions regarding renewable energy, publicly available data and performance reports indicate a positive trajectory for the state's energy transition.

The US startup Quidnet has successfully tested a new long duration energy storage system for six months without loss of power.

A recent analysis identifies Texas as the second most vulnerable state for summer power disruptions, trailing only Michigan. The assessment, conducted by Wolf River Electric, examined widespread outages affecting over 5,000 utility customers between 2019 and 2023. Texas recorded 7,164 summertime power outages during that timeframe. While Michigan experienced a higher number of overall summertime outages, Texas ranks first for the total hours of disruption – averaging 35,440 hours annually, equivalent to roughly 1,477 days. This indicates that power outages in Texas tend to be significantly longer, creating challenges for both residents and businesses during the summer months. The Electric Reliability Council of Texas (ERCOT) forecasts a potential record for peak electricity demand this August, projecting 85,759 megawatts, surpassing the previous high of 85,508 megawatts set in August 2023. Looking ahead to 2025, natural gas is anticipated to comprise 37.7% of ERCOT’s summertime power generation capacity, with wind energy at 22.9% and solar energy contributing 19%. ERCOT anticipates that four months will exceed a peak demand of 80,000 megawatts: June 2025 (82,243 megawatts), July 2025 (84,103 megawatts), August 2025 (85,759 megawatts), and September 2025 (80,773 megawatts). To put this in perspective, one megawatt is capable of powering approximately 250 homes during periods of high electricity demand. The increased demand for electricity in Texas is largely attributable to factors such as the growth of data centers, the proliferation of artificial intelligence applications, and overall population growth, all of which are placing considerable strain on the ERCOT power grid. To address this, ERCOT has proposed a $33 billion initiative focused on enhancing power transmission capabilities.

Fort Worth residents should prepare for a potentially challenging summer, as a recent study highlights Texas' vulnerability to power disruptions. The study, conducted by Wolf River Electric, ranked Texas as the second most at-risk state for summertime power outages, trailing only Michigan. The analysis examined large-scale outages impacting over 5,000 utility customers between 2019 and 2023, revealing that Texas experienced 7,164 such outages. While Michigan faced a higher number of outages overall, Texas accumulated the greatest total hours of power loss during the summer months – averaging 35,440 hours annually, equivalent to approximately 1,477 days. This indicates that when outages do occur in Texas, they tend to be significantly longer in duration. The Electric Reliability Council of Texas (ERCOT), which manages the state's power grid for 90% of Texans, anticipates a record-breaking peak demand of 85,759 megawatts this August, surpassing the previous record set in August 2023. ERCOT projects four months in 2025 will exceed 80,000 megawatts of demand, with August forecasted to be the most intense. One megawatt serves roughly 250 homes, meaning the projected August peak could power over 21.4 million residences. Looking ahead to 2025, natural gas is expected to contribute 37.7% of ERCOT's summer power generation, followed by wind (22.9%) and solar (19%). Increasing demand from data centers, the expansion of artificial intelligence, and continued population growth are placing considerable stress on the ERCOT grid. In response, ERCOT has proposed a $33 billion initiative to enhance power transmission capabilities.

This legislation proposes several significant changes to Texas’s energy infrastructure and regulatory framework, aiming to modernize processes and address evolving grid demands. A key objective is reforming the allocation of transmission costs, moving away from the current Four Coincident Peak (4CP) methodology. The goal is to shift a larger portion of these costs onto large load (LL) customers, potentially lessening the burden on residential and smaller commercial users. This shift is largely facilitated by new regulations requiring LL customers, both front-of-the-meter (FTM) and behind-the-meter (BTM), to contribute to interconnection expenses and directing the Public Utility Commission (PUC) to re-evaluate current cost allocation practices across various customer classes. To improve grid planning accuracy, the bill introduces “gating requirements” for LL customers seeking interconnection. These requirements involve financial commitments, such as a $100,000 deposit for interconnection study costs, along with disclosures about site control, on-site backup generation, and potential duplicate projects. These measures aim to better distinguish between viable load commitments and speculative projects. Concerning grid reliability, the legislation clarifies curtailment protocols for non-critical loads connected after a specific date. Utilities will be directed to coordinate load shedding efforts with customers where feasible during mandatory firm load shedding events. Proposals for LL BTM projects at existing generation sites will now be subject to a focused regulatory review process involving both ERCOT and the PUC, totaling 180 days. This review will require dispatchable plants to either provide full replacement capacity or ensure full load curtailment prior to anticipated emergencies. Importantly, this review process excludes arrangements with contracts executed before a specific date and does not apply to certain ongoing projects like the Stargate project. The local utility also retains the ability to formally object during this review. The bill also mandates the creation of a competitively procured demand reduction service, offering LLs an additional operational option. Furthermore, it expands ERCOT’s authority regarding backup generation resources and seeks to lessen the potential impacts on wholesale power markets. Finally, to protect the integrity of the competitive process, the legislation incorporates provisions to safeguard confidential information related to proposed LL projects.

Texas Aims to Bolster Electricity Infrastructure Amid Rising Demand Austin, TX – Texas lawmakers are taking action to proactively address potential electricity shortages and bolster the state’s grid reliability through Senate Bill 2627. The legislation seeks to encourage the development of new power generation facilities and transmission infrastructure, responding to a surge in electricity demand driven largely by the rapid expansion of data centers and other energy-intensive businesses. The core focus of SB 2627 is ensuring Texas can adequately meet its growing power needs. Current infrastructure may be strained by the escalating demand, raising concerns about potential grid instability and service interruptions. The bill incorporates several strategies, including efforts to optimize the operational efficiency of existing power plants, aiming to increase their capacity factors – the ratio of actual power output to maximum potential. Recognizing the importance of a robust transmission network, the bill prioritizes comprehensive transmission planning. This element seeks to guarantee sufficient infrastructure is in place to support new generation resources and reliably deliver power to consumers. Lawmakers emphasize the necessity of incorporating diverse stakeholder input – including energy companies, grid operators, legislators, and consumer advocates – throughout the planning and decision-making processes. The bill has been subject to revisions to refine its effectiveness and address concerns raised by various groups. The escalating number of data centers in Texas is specifically cited as a primary contributor to the increased electricity demand, underscoring the urgency of the legislative response. Related Articles: * Pratt & Whitney and machinist union reach tentative agreement. * Federal Reserve Chair Powell defends the Federal Reserve’s actions. * Texas oil executive appointed to Interior Department. * SpaceX Starship rocket launch. * Digital Equity Act faces racism accusations.

OCI Energy LLC, a Texas-based energy development firm, has entered into a memorandum of understanding with CPS Energy and LG Energy Solution Vertech. The agreement focuses on the Alamo City Battery Energy Storage System (Alamo City BESS), a 120 MW / 480 MWh energy storage facility currently being developed in Bexar County, Texas. This project aims to bolster the Electric Reliability Council of Texas (ERCOT) grid, specifically during times of high electricity demand, and contributes to Texas’s growing energy storage capabilities. LG Energy Solution Vertech will provide lithium-ion battery systems, alongside associated software and energy management technologies. OCI Energy will manage all facets of the project, including development, financing, construction, operation, and ongoing maintenance. CPS Energy, the principal energy provider for San Antonio, plans to finalize a capacity purchase agreement with OCI Energy to utilize the storage services. The announcement was made in Seoul, South Korea, reflecting the headquarters locations of the parent companies. Commercial operation is anticipated in 2027, contingent upon finalizing contractual details. OCI Energy President Sabah Bayatli emphasized the project's ability to provide essential energy infrastructure and promote local economic development. Jaehong Park, President and CEO of LG Energy Solution Vertech, noted the project's significance in strengthening the Texas grid. Rudy D. Garza, President and CEO of CPS Energy, connected the initiative to the company’s “Vision 2027” plan to address the region’s increasing energy needs.

Texas’s energy efficiency programs are currently structured in a way that favors utility companies over consumers and the stability of the electrical grid, a situation that has not been adequately addressed following the devastating 2021 winter storm. The prevailing system presents a significant problem: it incentivizes utilities to maintain high levels of energy consumption, essentially rewarding them for *not* reducing it. This approach leads to lost opportunities for bolstering grid resilience, lowering consumer expenses, and minimizing overall energy waste, while simultaneously impairing the state's ability to weather extreme weather events. A particularly wasteful practice contributing to this problem is the widespread use of inefficient resistance heating. The root of this issue lies in the system's inherent incentives. Utilities operate under a model where increased energy sales directly translate to greater profits, creating a conflict of interest when it comes to promoting energy efficiency measures. Legislation like SB 380 has drawn criticism for seemingly prioritizing utility gains over the well-being of consumers and the overall health of the grid. The potential benefits of a more effective energy efficiency strategy are substantial. Widespread adoption of heat pumps to replace resistance heating, for example, could effectively eliminate the need for load shedding during winter storms and deliver approximately $500 in annual savings for consumers. Beyond this specific area, a broader commitment to energy efficiency would yield lower costs for all, improve grid reliability, and reduce the state’s environmental footprint. Notably, recommendations made by federal investigators following the 2021 crisis, urging increased investment in energy efficiency programs, have largely gone unheeded. To correct this course, a fundamental shift is needed: control of energy efficiency programs must be taken out of the hands of the utilities. Several pathways exist to achieve this. The Public Utility Commission (PUC) could assume administrative responsibility, or ERCOT, already involved in residential demand response initiatives, could be utilized. Alternatively, a competitive bidding process could be established, allowing companies to bid on implementing efficiency programs on behalf of the PUC and the public. A competitive demand-side market is considered the most promising approach for delivering tangible benefits to ratepayers. The core problem is the conflict of interest inherent in allowing utilities to control energy efficiency programs. The current system prioritizes utility profits at the expense of consumer savings and grid reliability. The recent legislative session presented a crucial opportunity to address these issues, and failing to do so represents a significant lost chance. Independent oversight, whether through the PUC, ERCOT, or a competitive market, is essential for ensuring the effectiveness of energy efficiency initiatives.

ENGIE North America has formed a partnership with investment funds overseen by CBRE Investment Management regarding a collection of battery storage facilities located in Texas and California. This deal marks one of ENGIE’s most substantial operating asset partnerships in the United States and stands as a significant transaction within the energy storage sector. ENGIE will maintain a majority ownership stake and will continue its role in operating and managing these assets. The portfolio encompasses 31 operational projects, collectively providing 2.4 gigawatts of storage capacity within the Electric Reliability Council of Texas (ERCOT) and California Independent System Operator (CAISO) regions. Dave Carroll, Chief Renewables Officer and SVP of ENGIE North America, highlighted the partnership’s importance in addressing the rising need for power in Texas and California, emphasizing ENGIE’s dedication to bolstering the resilience of both grids. Carroll also acknowledged CBRE IM’s investment as a testament to ENGIE’s successful history in developing, constructing, financing, and managing renewable energy assets worldwide. This collaboration aligns with ENGIE’s broader North American strategy, which includes capital recycling and the inclusion of a prestigious, global investor like CBRE IM among its partners. With over 11 gigawatts of renewable energy production and battery storage currently operational or under construction in North America, ENGIE aims to further expand its presence in the battery storage market globally. Robert Shaw, Managing Director, Private Infrastructure Strategies at CBRE Investment Management, expressed enthusiasm for the partnership, noting the portfolio’s established operating history and high quality. Shaw emphasized that the investment reinforces CBRE IM’s strategy of investing in “Infrastructure 2.0” assets that benefit from digitalization and decarbonization trends, alongside strong contracted revenue streams.

Texas Grid Successfully Navigates Peak Demand, Solar Power Plays Key Role Today marked a significant achievement for the Texas power grid as a new peak demand record was set. Importantly, the state avoided any conservation requests or energy emergencies. Contributing heavily to this success was solar power, which supplied between 25% and 30% of the total energy demand throughout the day. Recent Developments and Concerns A recent article in The New York Times has raised concerns regarding potential legislation that could negatively impact the Texas economy. Economist and University of Houston energy fellow Ed Hirs highlighted the critical role of renewable energy growth, stating that without it, "the Texas grid is dead in the water, and so is the economy." The Public Utility Commission (PUC) will be addressing two key issues tomorrow: ERCOT's request for an exception related to load growth and a performance audit of CenterPoint’s response to Hurricane Beryl, specifically addressing their failure to deploy $800 million in mobile generators. Live Q&A Session Join for a live discussion tomorrow, May 15th, from 10:00-11:00 CT during the PUC meeting. This will be an opportunity to ask questions and receive updates directly. Subscriber Benefits This Grid Roundup, along with access to the full archive, select episodes of the Energy Capital Podcast (including a recent discussion with Fluence VP of Policy Suzanne Leta on the transformative role of energy storage), special presentations, curated reading lists, and more, is available exclusively to paid subscribers.

Texas anticipates a surge in power demand beginning Tuesday, potentially setting a record for the month as temperatures rise. According to ERCOT, the agency responsible for managing most of the state’s electrical grid, current power supply appears sufficient, but the focus is on meeting the escalating demand. Experts project a peak demand of approximately 84,000 megawatts, significantly higher than the 77,000 megawatts used in May of last year. The state's rapid population and business growth, particularly the increasing power needs of data centers, are driving this expansion. Texas is actively exploring strategies to effectively double its power grid capacity, a growth rate not seen since the 1980s. ERCOT’s forecasts indicate a projected increase of nearly 50,000 megawatts needed by 2030. To illustrate the scale, one megawatt can power roughly 250 homes during peak usage. Recent discussions reveal a mix of optimism and concern regarding the state’s grid expansion efforts, acknowledging the expected costs which are likely to impact consumers. The need for grid upgrades drives expenses, with consumers potentially bearing the burden of replacing aging equipment. The Texas legislature is playing a crucial role, with multiple bills related to the power grid currently under consideration in the House, including Senate Bill 6, which aims to improve infrastructure and reliability and is currently pending in a House committee after passing the Senate.

Texas lawmakers recently enacted Senate Bills 2 and 3, signed into law by Governor Greg Abbott, aiming to overhaul the Electric Reliability Council of Texas (ERCOT) and bolster the state's power grid resilience following the devastating winter storm in February 2021. The storm resulted in widespread outages and tragic loss of life, exposing a critical flaw in Texas’s energy system: a lack of incentives for electricity generation companies to ensure sufficient power plant capacity during peak demand periods like intense heat waves or severe cold snaps. For over two decades, the Texas Legislature has failed to address this fundamental design weakness. The Texas grid, managed by ERCOT, operates as an "electricity-only" market. This unique structure compensates companies solely for the electricity they produce, not for maintaining essential infrastructure. Consequently, companies are incentivized to decommission plants rather than invest in upgrades or new construction, leaving the grid vulnerable to price volatility when supply struggles to meet demand. The situation resembles a cartel, similar to OPEC, where limiting supply can artificially inflate prices. In the ERCOT system, curtailing electricity during times of scarcity can drive wholesale prices to exorbitant levels, jumping from the typical 4 cents per kilowatt-hour to as high as $5. A recent report indicated Texans were overcharged by $12 billion in 2023. While ERCOT’s Independent Market Monitor deemed the market competitive due to the limited influence of "pivotal suppliers," this assessment overlooks the subtle, unspoken agreements among multiple suppliers— a concept illustrated in the film "A Beautiful Mind." Data reveals a higher frequency of unexpected generator outages in Texas compared to the federally regulated PJM grid, suggesting generators are strategically taking plants offline. In response to California's grid issues in 2020, the state's grid operator proactively ordered 5,000 megawatts of new natural gas-fired generators and implemented a demand-response program, utilizing text alerts to encourage consumers to reduce power usage during periods of strain. Texas had the opportunity to adopt similar strategies years ago but has not. Legislators still have the chance to implement meaningful reforms. This will require prioritizing the needs of all Texans over the interests of powerful lobbyists representing wealthy energy interests and their political donors.

A unique new virtual power plant in Texas leverages solar-plus-storage power purchase agreements to attract more ratepayers.

AEP Texas Gains Approval for Key Transmission Line Project The Public Utility Commission of Texas (PUCT) has granted approval for AEP Texas to construct a 765-kilovolt (kV) transmission line, marking a significant step for the Electric Reliability Council of Texas (ERCOT) which serves 90% of the state's electricity demand. This project, known as the Howard-Solstice Transmission Line, is part of a broader plan addressing the electric needs of the Permian Basin. Judith Talavera, AEP Texas president and chief operating officer, highlighted the importance of this development given the state’s substantial population and economic growth. The new line will bolster the electric grid's ability to handle increasing demand. The project is one of three 765-kV lines designed to provide new power delivery routes. The Howard-Solstice Transmission Line will connect AEP Texas’ Solstice Substation near Fort Stockton to a substation near San Antonio, spanning approximately 300 miles. This enhanced transmission infrastructure will facilitate a more efficient and dependable electricity delivery system, paving the way for future growth in West Texas communities. Texas House Bill 5066, enacted in 2023, mandated the PUCT to guide ERCOT in crafting a reliability plan for the Permian Basin. AEP Texas’ parent company, American Electric Power, is a leader in 765-kV transmission infrastructure, owning the largest network in North America. Community information sessions will be held this summer along the planned route for project updates and to address public inquiries.

Trustee contends gross negligence claims should advance Texas grid asserts immunity from state law claims The trustee managing Entrust Energy Inc.’s liquidation has rejected ERCOT's recent effort to dismiss a lawsuit, asserting that constitutional violation and gross negligence claims possess merit and warrant discovery. The lawsuit against ERCOT, the organization responsible for managing Texas’ electric grid, should proceed to assess the extent of damages—ostensibly stemming from gross negligence during the 2021 winter storm and the subsequent loss of Entrust’s customer base—in relation to ERCOT’s counterclaims against the company. This determination is sought in a filing submitted Thursday to the US Bankruptcy Court for the Southern District of Texas. ERCOT has issued a demand for $296

Texas is projected to see its energy demand double by 2031, according to a report from the Electric Reliability Council of Texas (ERCOT). The report estimates that peak demand could hit 218 gigawatts by 2031, up from a record 85.5 gigawatts in 2023. The growth in energy demand is largely driven by data centers, with ERCOT defining them as "facilities designed for cloud storage and computing." This comes after the power grid operator previously reported that demand could outpace supply as early as 2026 due to data centers. To address this issue, Lt. Gov. Dan Patrick has made figuring out how to account for the rising electric demand one of his legislative priorities. Senate Bill 6, which unanimously passed in the upper chamber, specifically deals with grid reliability and improvements to the state's digital infrastructure, including its ability to handle large loads like data centers. Governor Greg Abbott has also highlighted the state's work to bolster the electric grid, citing Texas as the No. 1 state for wind energy and one of the top states for solar power. However, he also acknowledged that fossil fuel power remains the backbone of the grid, noting that the state has added approximately 35% more energy supply since 2021, mostly from sources like solar and battery energy storage. The lower end of ERCOT's forecast estimates a peak energy demand in 2031 at 145 gigawatts, still well above the current record demand. While this growth represents humongous economic opportunity for Texas, it also poses significant challenges for the state's power grid operators to ensure reliability and affordability for consumers.

The Texas energy landscape is undergoing significant transformations, with growth and development expected to continue. According to the CEO of ERCOT, a well-designed energy-only market can meet this growing demand. The ERCOT energy-only market has been positioned as "well-suited" to support the increasing load that the grid will face. A new bill, Senate Bill 819, is likely to be on the Senate floor next week, with the potential for passage and implementation in the coming months. Another related development is the upcoming House committee hearing for a House version of Senate Bill 715. In addition to these legislative developments, significant records have been set for solar and battery energy production, marking an important milestone in the transition towards more renewable energy sources. Looking ahead, ERCOT has also made forecasts regarding April demand, indicating that they are working hard to stay ahead of anticipated energy needs. These changes underscore the evolving nature of the Texas energy market and highlight the importance of forward-thinking planning and infrastructure development.