Last month, ERCOT walked back some of the most aggressive long-term load growth projections in the country. After months of sounding the alarm about runaway demand – particularly from data centers, crypto miners, and industrial reshoring – Texas’ grid operator revised its forecasting methodology to exclude redundant interconnection requests and speculative projects lacking contractual commitments.

But while the market digests this update, the conversation has remained focused on demand. Less attention is being paid to the other half of the equation: the assumptions we make about supply – specifically, how quickly renewables and battery storage will come online.

The Over-Looked Variable: Supply-Side Divergence

This week, we introduced two new net load scenarios for ERCOT. While they both use ERCOT’s revised load growth projections (138 GW peak demand by 2030), they use different assumptions for renewables penetration, which makes a material difference in PPA and BESS toll valuations.

The High Renewables scenario counts all proposed solar, wind, and BESS projects with ERCOT interconnection agreements, regardless of whether they’ve secured financing. This suggests 178 GW of solar, wind, and BESS by 2030.

The Low Renewables scenario, in contrast, counts only proposed solar, wind, and BESS projects that have secured both an interconnection agreement as well as financing. This scenario suggests 144 GW of solar, wind, and BESS by 2030.

Why This Matters for PPAs and BESS Tolls

If renewable penetration aligns with the higher scenario – either because of policy, capital availability, or improvements in technology – we may see more frequent energy price suppression during periods of high solar output. That, in turn, could reduce the value of merchant revenue streams and put downward pressure on solar PPA prices. In fact, according to our benchmarks, this scenario would reduce the value of a 10-year solar PPA in ERCOT by more than $2 per MWh. For wind, however, it would increase the value of a 10-year PPA by about $0.50 per MWh.

Battery Energy Storage Systems (BESS) are also sensitive to these dynamics. Their revenue depends on price spreads, volatility, and the frequency of arbitrage opportunities. More renewables on the grid would lead to more price volatility, as renewables depress midday pricing. BESS benefits from this dynamic as it is able to charge at lower prices. According to our benchmarks, an average BESS TB2 in ERCOT would be worth about $0.40 (or ~5%) more per kW-month in the high renewables scenario.

The Bottom Line: Two-Sided Uncertainty

The renewable energy market has accepted that forecasting demand is difficult. But supply-side forecasting is just as uncertain – and just as impactful to PPA prices.

In a market like ERCOT – where the energy-only structure magnifies both scarcity and surplus – what gets built (and what doesn’t) matters as much as who shows up to use it.