ERCOT Batteries Shifting from Supply to Demand

Luke Giffen contributed to this article

As renewable generation buildout has accelerated over the last 15 years, critics have often highlighted the problems arising from renewable generation’s output varying throughout the day. Natural gas has historically filled this generation gap since the shale revolution due to its ability to ramp quickly, but battery energy storage systems (BESS) have been becoming more popular since the start of the 2020s. In fact, BESS capacity is anticipated to grow across all major U.S. power markets, with the Electric Reliability Council of Texas (ERCOT) expected to lead this growth since they account for 37% of all BESS projects in mid-to-late stages of development in the United States. Today’s Energy Market Insight will explore the role BESS are playing in ERCOT and where they are expected to be built.

The state of BESS in ERCOT & where to find it

ERCOT has commissioned 11.3 GW of battery storage to date, accounting for nearly 27% of all operational BESS capacity in the United States. While this figure remains modest relative to ERCOT’s renewable generation fleet, batteries are playing an increasingly important role in grid supply. During the peak BESS daily discharge hour in October 2025, batteries dispatched an average of 4.8 GW of power, up from just 0.37 GW in October 2023.

This growing significance of battery storage is closely tied to broader trends in renewable generation across the ISO. Historically, BESS buildout in ERCOT has more closely aligned with the ISO’s regional trends in renewable development. The West Hub, which currently accounts for over 50% of ERCOT’s operational wind and solar capacity, has also seen the largest power storage deployment, with roughly 31% of ERCOT’s operational BESS capacity. This alignment reflects the conventional strategy of siting storage near intermittent generation to absorb excess energy and discharge it as demand rises or generation wanes.

Significant BESS buildout is expected to continue across ERCOT, though a deviation from historical siting trends is evident. Notably, Houston is expected to add 9.6 GW of BESS capacity by the end of 2027, marking a fivefold increase. This growth is occurring despite the hub accounting for less than 6% of ERCOT’s forecasted renewable capacity. In contrast, the West Hub is projected to see the largest renewable buildout of the ERCOT hubs over the same period, with over 45 GW of planned operational capacity, yet it is slated to see the least BESS deployment. This disconnect signals a shift from the traditional trends of co-locating battery storage near intermittent renewable generation.

Arbitrage driving change?

One possible driver is that peak pricing events in ERCOT’s load centers are allowing for profitable pricing arbitrage opportunities. The economic incentive for this shift in location strategy becomes apparent when comparing regional trends at the Hub level. For an optimized BESS commissioned in January 2022, pricing spreads in the Houston Hub would have yielded approximately 6.4% more revenue than ERCOT’s West Hub. This illustrates that if battery developers are solely focused on maximizing returns, the primary consideration shouldn’t be where the power comes from, but rather how profitably it can be discharged.

Going forward

These trends in ERCOT suggest that BESS capacity is increasingly being deployed as a flexible resource in high-demand areas. The continued buildout and upgrading of transmission infrastructure across ERCOT will allow BESS capacity to store renewable generation closer to load centers, where it can be dispatched to capture peak prices and provide stability during times of grid strain. Overall, power storage continues to emerge as a versatile solution to many of the grid’s current challenges, so long as technological advancements and grid upgrades continue.

As the BESS landscape continues to take a more definite shape, be sure to stay up to date with more Energy Market Insights for the latest on battery storage, power markets, and more!

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