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by Cliff Rose and Laura Fletcher
The Electric Reliability Council of Texas (ERCOT) is undergoing a transformative shift, with battery energy storage systems (BESS) emerging as a pivotal component of the state's energy mix. As renewable energy generation reaches record levels, ERCOT energy storage is helping stabilize the grid, reduce costs, and improve reliability during peak demand.
One of the fastest-growing battery storage markets in the country, Texas ranks second only to California in terms of installed capacity and has more capacity than the remaining 48 states combined.
Source: Texas Comptroller, US Energy Information Administration; nameplate capacity. Top 10 states with the most installed battery storage capacity, September 2024 (MW).
This expansion presents significant opportunities for utilities, independent power producers (IPPs), and battery developers looking to optimize their operations and investments.
Here’s what you need to know.
ERCOT Energy Storage Enhances Grid Reliability and Efficiency
Battery systems are playing a key role in strengthening the ERCOT grid by:
- Providing ancillary services essential for maintaining grid stability, especially during peak demand or extreme weather events.
- Offering energy arbitrage opportunities — storing electricity when prices are low and selling during high-demand periods when prices rise — that enhance developer profitability and contribute to grid efficiency by balancing supply and demand.
- Supporting renewable integration by storing excess wind and solar generation and dispatching it when needed, typically in the late afternoon and evening, when solar production declines but demand is high.
Source: American Clean Power. ERCOT capacity by fuel type (2022-2024).
Texas leads the US in renewable energy deployment, with utility-scale solar generation growing by 35% year-over-year in 2023, reaching 32,000 GWh. By mid-2024, wind and solar farms accounted for nearly 40% of the state’s electricity generation.
In addition, ERCOT nearly doubled its battery capacity between 2023 and 2025. ERCOT battery storage capacity is now approaching 10 GW (see image below) with even more capacity in the pipeline.
Source: Yes Energy’s Infrastructure Insights Module. Battery projects in development or under construction in ERCOT as of April 29, 2025.
Yes Energy’s Infrastructure Insights is currently tracking over 1,100 battery energy storage projects under construction or in development across the ERCOT region, totaling 180.5 GW of planned capacity, shown above.
Real-World Impact: From Grid Resilience to Price Stability
ERCOT’s grid has already reaped the benefits of storage growth. During the summer of 2023, ERCOT issued 11 conservation notices to manage tight supply. In summer 2024, despite comparable demand levels, no alerts were needed, thanks to nearly 5 GW of new ERCOT battery storage capacity (see images below).
Source: American Clean Power. Hourly dispatch on August 10, 2023, peak load of 85.2 GWh at 6 p.m. (hour 18).
Source: American Clean Power. Hourly dispatch on August 20, 2024, peak load of 85.2 GWh at 6 p.m. (hour 18).
Storage also helped stabilize energy prices in recent years:
- Real-time power prices in 2024 averaged $31/MWh lower than in 2023.
- In August 2024, prices fell by $160/MWh – the state’s peak demand month.
What’s Driving ERCOT Energy Storage Growth?
Several elements are contributing to the rapid expansion of ERCOT's battery storage market:
- Favorable Regulatory Environment: ERCOT’s market structure and streamlined permitting process enable faster BESS deployment than most US markets.
- Economic Incentives: The Inflation Reduction Act of 2022 introduced federal tax credits that have spurred investments in battery storage.
- Technological Advancements: Battery systems' modular nature allows for scalable and rapid deployment, facilitating quicker returns on investment.
- Increased Demand: Texas expects 152 GW of new load by 2030, led by growth in population, manufacturing, data centers, and other large-load sectors.
Virtual Power Plants Leverage Growing Battery Fleets
Beyond grid-scale projects, virtual power plants (VPPs) are unlocking new value from distributed battery assets. VPPs aggregate distributed energy resources (DERs) – like residential and commercial battery storage systems, electric vehicle batteries, and even connected thermostats – into coordinated, dispatchable grid resources. They allow utilities to reduce peak load without large capital investments in centralized assets.
IPPs can aggregate BESS assets across multiple locations into a single VPP, enabling participation in wholesale, day-ahead, and ancillary markets. In ERCOT, where wholesale market prices can swing dramatically in minutes, the ability to coordinate and monetize anywhere from tens to thousands of distributed resources in near real-time is game-changing.
VPPs are also expanding the already competitive ERCOT market.
In recent years, battery manufacturers like sonnen have partnered with utilities and solar providers to launch residential VPP pilot programs. Leveraging control of solar batteries, EVs, and thermostats, these companies have a growing presence in the state’s energy markets.
Potential Headwinds: Regulatory Uncertainty
While the ERCOT energy storage market is booming, a new bill – SB 388, passed by the Texas Senate in March – could alter the playing field. Starting in 2026, the bill would require that at least 50% of all new generation capacity come from dispatchable sources, excluding battery storage. Developers failing to meet this threshold would need to buy credits.
Although the bill originally specified natural gas, it was revised to include any dispatchable source other than batteries. If enacted, the legislation could have a chilling effect on ERCOT battery storage projects by shifting investments toward gas or other long-duration assets. The bill is now under consideration in the Texas House.
Succeeding in the ERCOT Battery Storage Market
Battery storage is a central pillar in ERCOT’s evolving grid. Texas' unique market structure, coupled with surging demand, is creating a hotbed for innovation and investment.
That said, making informed decisions about asset siting and power offtake strategies and optimizing your participation in the ERCOT battery market requires critical market intelligence.
When deciding where to site a project, you have to consider many factors. You need to evaluate historical prices and forecast nodal pricing, understand market fundamentals, and account for upcoming changes to the grid.
Yes Energy’s GridSite provides the market intelligence you need to compare potential sites based on these critical factors. It helps developers understand what locations on the grid have higher volatility, indicating favorable market conditions for energy arbitrage. The below chart shows daily average price spreads in ERCOT from January 2024 to May 2025.
Source: Yes Energy’s GridSite. Average daily real-time LMP price spreads in ERCOT, January, 1, 2024 to May 15, 2025.
GridSite’s robust data set also enables you to analyze the operations of similar plants to your proposed asset.
Source: Yes Energy’s GridSite. Rodeo Ranch Energy Storage five-minute dispatch and nodal LMP, March 1-15, 2025. Red = discharging, Blue = charging. Green = LMP.
Backed by a fundamentally produced, long-term (through 2050) nodal pricing forecast, GridSite also helps you understand future pricing scenarios.
Source: Yes Energy’s GridSite. Average nodal LMPs, 2025 - 2050, in ERCOT.
Part of GridSite, Infrastructure Insights informs you about upcoming local and regional changes to the grid. The Yes Energy team creates a robust data set by tracking transmission projects, renewable and other generation assets in the interconnection queue, large load construction such as data centers, and more.
Together, these tools enable users to make informed decisions about where and how to deploy ERCOT battery storage projects and develop robust participation strategies for ancillary services and energy arbitrage markets.
Contact Yes Energy to learn how GridSite and Infrastructure Insights can optimize your participation in the ERCOT markets.
About the author: Cliff Rose is a senior product manager at Yes Energy currently focused on building products that help power plant developers leverage wholesale power market data in their decision-making. He has 12 years of experience helping companies navigate power markets in both a consulting and software development capacity. Outside of work, you can find Cliff engaging in stereotypical Colorado activities such as skiing, running, and biking.
About the author: Laura Fletcher is on the Yes Energy product team as an associate product manager. Prior to joining the team, Laura studied environmental engineering at Georgia Tech. She started working with energy data as a college intern, and she has worked on various consulting projects, annual market forecasts, client relations, and database management.
