Energy Market Update

• Well nominal temperatures across Texas last week, before real feel index with humidity, only Austin hitting 102F and San Antonio reach 100F on 9/15. Dallas and Houston topped out at 98F as temperatures were in the low to mid 90’s rest of the week. This still produced strong cooling demand.  Flat average wind ranged 7.5-10.8 GW with most of the week so it was down from the previous week.  Solar was flat at 11-12 GW.
• NHC Current Hurricane Status: No current storm threats

• As we are in the back half of September, the core of cooling degree-day (CDD) demand will remain focused from Texas and the southern Plains into the Southwest, with occasional spikes into the interior West. The 11-15 day period takes us into the first week of October, when a generally above-normal pattern across much of the United States should lead to a slow start to the heating season in the North while keeping cooling demand active across the southern tier.  What does the forecast mean for Texas? We should see temperatures in the middle to upper 90s through the rest of this week despite a frontal boundary slowly sagging south into northern Texas. There is a bright spot on the horizon, as the pattern should cool down toward the middle of next week, with—wait for it—highs potentially returning to the 80s. We’ll see how that works out as the models have shown a cool bias the closer they get to the 11-15 day period.
• Over the past week, forward prices in ERCOT prices were lower by 2% for 2027, -1.7% for 2028 and 0.5% for 2029. The regulatory uncertainty around the Batch Zero process and its timeline are one of the biggest question marks over hanging the market.

 Source: ERCOT

• Real time prices were in the mid $40’s/MWh last week except for the North zone averaging $64/MWh

Recent Solar, Wind and Battery Milestones:

• ERCOT notched another new battery CHARGING record of 12,299 MW on September 10^th at 9:15 am CT, displacing the one from September 1^st of 11,460 MW. The discharge record from August 23^rd of 13,255 MW at 7:45 pm CT still stands.   
• The solar output record of 35,281MW from 7/30 still stands. This surpassed another record set on July 27^th for 34,700 MW. The top 10 days for ERCOT maximum solar have occurred so far this year in July and August.
• The new all-time maximum load record of 91,089 MW from July 22^nd still stands but August has traditionally seen ERCOT set its new peak loads. ERCOT set a new maximum solar output record 35,281 MW on July 30^th and the second new one this week. On July 8^th ERCOT set a new discharge record for batteries of 11,674 MW breaking the record of 10,372 MW set back on March 13^th.
• June 25^th saw a new record output for combined renewables of 51,974 MW, the second this week and breaking the previous record of 47,919 MW on May 14^th.  ERCOT set a new wind record last week at 28,928 MW on May 17^th at 11:50 PM CT as winds were strong overnight.  The previous maximum wind record of 28,715 MW set on 3/14 at 10:55 pm CT. ERCOT also set a maximum renewables output of 47,919 MW on May 14^th at 3:15 pm CT. This was ~900 MW higher than the previous record from last June.

Generator Outages

• Thermal generation outages ranged from 10-12 GW last week.  A likely driver is plants performing short term maintenance over the weekend as it has been a long summer and short-term maintenance is done on weekends. Full maintenance season will likely not start until October.

https://www.gridstatus.io/graph/ercot-outages?iso=ercot&outageType=thermal

Source: ERCOT & Grid Status

TX Legislature, PUCT, & ERCOT News:

PUCT Adopts SB 6 Large Load Interconnection Rule - The Public Utility Commission of Texas (PUCT) has adopted the rule implementing the large load interconnection provisions enacted through SB 6.  The rule requires prospective large loads to execute an intermediate agreement with the transmission utility, provide ownership and operational disclosures, and post financial security of $50,000/MW before being included in ERCOT interconnection studies and load forecasts.  The rule is intended to improve planning certainty, reduce speculative interconnection requests, and ensure large-load projects demonstrate meaningful financial commitment before consuming transmission planning and study resources.  The new requirements will significantly increase upfront obligations for data centers and other large-load developments while creating additional financial consequences for project withdrawals.  While the PUCT has now adopted the rule, substantial implementation work remains.  ERCOT, transmission providers, and stakeholders must determine how the new requirements will be administered in practice, including interaction with the still pending transmission cost allocation rule.

Governor Abbott Directs TWDB to Enforce Water Use Reporting Requirements for Data Centers - On 9/14, Governor Greg Abbott issued a letter directing the Texas Water Development Board (TWDB) to pursue enforcement actions against major water users, including data centers, that failed to comply with statutory water use reporting requirements under the Texas Water Code.  The Governor asserted that certain entities may have committed both civil and criminal violations by failing to return required water use surveys and instructed TWDB to utilize its existing enforcement authorities, including potential referrals to county or district attorneys and notification to the Texas Commission on Environmental Quality regarding permit eligibility consequences.

Governor Abbott emphasized that complete and accurate water usage information is necessary for TWDB's state water planning responsibilities and noted that survey responses for calendar year 2025 were due on 3/1.  Under existing law, entities that fail to submit required survey information may face criminal penalties and become ineligible for certain water-related permits or permit renewals.  The Governor also directed TWDB to coordinate with ERCOT and the Public Utility Commission of Texas (PUCT) as part of the ongoing statewide data center audit announced in August.  Abbott instructed TWDB to leverage its statutory authority to obtain additional water-use data through coordination with ERCOT and indicated that failure to provide requested information through the audit process could independently trigger TWDB enforcement actions.  Governor Abbott requested an update by 10/14, on the progress of TWDB’s enforcement activities, with further updates to follow, including when the audit is complete.

Texas GLO Launches Energy Development RFI Process - On 9/15, the Texas General Land Office (GLO) announced a new initiative to evaluate development opportunities for geothermal energy, small modular nuclear reactors, and future natural gas generation projects on Texas state lands. As part of the effort, the GLO has issued requests for information (RFI) seeking input from developers, technology providers, energy producers, and other qualified stakeholders regarding potential projects on Permanent School Fund lands.  The GLO manages more than 13 million acres of state land and minerals and uses responsible resource development to generate revenue for the Permanent School Fund, helping support Texas public education.  Responses to the RFI are due by 12/10.

ERCOT Board Approves 2027 Ancillary Services Methodology - On 9/15, the ERCOT Board approved ERCOT’s proposed 2027 Ancillary Services (AS) Methodology.  Notably, this was the first time ERCOT advanced an AS methodology to the Board without first receiving endorsement from the Technical Advisory Committee. Debate centered on ERCOT’s proposal to apply risk credits that reduce ERCOT Contingency Reserve Service (ECRS) and Non-Spin requirements, as well as its decision to maintain sufficient ECRS and Non-Spin reserves to fully replenish deployed Responsive Reserve Service (RRS) and Regulation Up capacity.  ERCOT, the Independent Market Monitor, Texas RE, and representatives from the Residential Consumer and Independent Generator segments all presented their positions before the Board. Following extensive discussion, the Board approved ERCOT’s proposal as filed.

The approved methodology does not make significant changes to Regulation or RRS procurement.  However, it modifies key parameters used to determine ECRS and Non-Spin requirements, reducing procurement quantities and partially offsetting the increase in reserve requirements resulting from issues ERCOT identified in its probabilistic reliability model earlier this year.  The methodology must still be approved by the Public Utility Commission of Texas before taking effect on 1/1/27.  We expect the Commission to adopt the methodology as recommended by the ERCOT Board.

Source: ERCOT