In 2023, traders did a complete 180 on long-term on-peak electricity in ERCOT.

At the beginning of the year, the market was bullish toward on-peak contracts beyond 2029 (the dark green curve below).

By the end of the year, however, the market had seriously soured on them (the light green curve below).

In other words, the forwards started the year in contango and ended it in backwardation.

What explains the profound change of heart?

Part of the reason is likely the market's view that the 'duck curve' will continue to worsen, potentially devaluing certain on-peak hours.

As the midday dip of the 'duck curve' deepens and the peak of the curve pushes later into the evening, traders seem increasingly uncertain about the long-term value of on-peak electricity in ERCOT.

While this puts pressure on the market for solar PPAs in ERCOT, it is likely to create opportunities for storage and wind deals.