ERCOT Curtailments Persist as Load Rises

Even as demand from data centers grows, weather remains a dominant factor affecting both gas and power markets across the United States. In Texas, the drop to frigid temperatures several times this winter has led to a significant increase in ERCOT prices, surging by an average of 20% compared to the previous year. Despite these rising prices and load, transmission constraints still force ERCOT to curtail its renewable generation, leading to a tighter market at crucial points throughout the year and day. Today, we will examine ERCOT’s ongoing curtailment challenges and discuss how much is being curtailed and where.

Our analysis, created using the latest addition to our comprehensive energy market offering, which provides generation, load, and interchange data by combining curated EIA and ISO-sourced data, reveals a notable trend: since the beginning of this year, ERCOT has set new daily peak-load records 26 times. Also, as illustrated in the graphic below, ERCOT cumulative load this year has been outstripping last year by 10% and 2023 by 20%.

We previously discussed the surge in natural gas plant applications in interconnection queues designed to address the increasing load, along with Constellation’s expanding dispatchable portfolio following the Calpine acquisition. In the short term, though, ERCOT remains heavily reliant on renewable energy sources, with wind and solar accounting for more than a third of its generation for 2024. However, even with this significant renewable input, ERCOT is still curtailing an average of 1.2 GW per hour throughout the year. To put this into perspective, it equates to shutting down 37 solar facilities with a capacity of 125 MW each or 17 wind farms of 180 MW each within ERCOT.

Drilling down to the regional level, the graphic below shows that the Panhandle and West zones remain the most affected by curtailments. Here, wind and solar facilities frequently outstrip the available transmission capacity to the rest of ERCOT, resulting in significant curtailments. In 2024, the West zone experienced the most substantial curtailments, with 3.1 TWh of wind and 2.2 TWh of solar generation curtailed.

While the West leads in total curtailments, the South zone is disproportionately represented at the facility-level, containing three of the top five projects with the most curtailments in the ISO. Across the board of the top 50 curtailers in ERCOT, 44 of them saw year-over-year increases in curtailments.

In the long run, transmission buildout will be key to reducing curtailments throughout ERCOT. Projects like the Permian Basin Reliability Plan, with its potential for the start of a 765-kV transmission backbone network, would go a long way in bringing electrons to market. However, similar to other large-scale infrastructure projects, there are significant lead times to any transmission buildouts. In the interim, ERCOT’s battery storage capacity—currently around 9 GW and steadily increasing—will play a key role in capturing curtailed generation. We will explore how ERCOT’s expanding battery fleet is addressing these curtailment challenges in a future Insight.

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