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ERCOT Long-Term Outlook and Potential Impact of Ongoing Reforms

This report’s key takeaways include the following:

  • The 88th Texas Legislative Session began in January and has included much discussion surrounding energy and reliability in ERCOT. The regular session ended Monday, May 29; among the bills on the way to be signed in to law are SB 2627 and HB 1500 (PUC Sunset Bill). SB2627 will still require voters to weigh in next November on the constitutional amendment attached to the bill.
  • Preliminary analysis of market redesign proposals highlights the challenges of incentivizing new dispatchable capacity to improve reliability within the energy-only market design of ERCOT while limiting the increase in system costs and maintaining investor confidence.
  • Our Central long-term outlook exhibits rising ATC prices through the horizon due to upward pressure from gas prices and demand, not fully offset by large renewables and energy storage buildout.
  • ECRS (ERCOT Contingency Reserve Service), a new ancillary service, is set to go live in June; analysis shows ECRS will make up a substantial portion of battery margins in the 2020s, decreasing as ancillary markets become saturated and batteries move towards energy arbitrage.

If you would like more information, please get in touch with Danielle Startsev.

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