ERCOT Methodology

Modo Energy provides benchmark data for battery energy storage systems across global energy markets, applying a standardized methodology to ensure consistency and transparency across all produced Indices.

1. Introduction

The Modo Energy Electric Reliability Council of Texas (ERCOT) Methodology Framework outlines the calculation and construction of Modo Energy’s battery energy storage Indices in ERCOT. This document provides detailed insights into:

• the inclusion criteria for assets;
• the components that make up published revenues; and
• the methodologies employed;

to ensure accurate and reliable benchmarking for ERCOT’s battery energy storage sector.

1.1 Representation

Modo Energy’s Indices are designed to track the performance of grid-scale lithium-ion battery energy storage systems in ERCOT. Since battery energy storage projects differ in their characteristics, Indices are also tailored to highlight and assess the revenue performance of assets with specific attributes, such as system duration.

1.2 Rationale

The Indices measure the revenue that battery energy storage systems in ERCOT earn from the wholesale energy and ancillary service markets. They are expressed per unit of installed capacity, so assets of different sizes can be compared on the same basis.

Modo Energy builds the Indices from ERCOT's resource-level market disclosure data rather than from operator-reported revenues. Every commercially operational battery in ERCOT appears in this data, so the Indices cover the whole fleet, not a self-selected sample. Revenues are calculated from ERCOT's public data using the settlement logic in ERCOT's Nodal Protocols.

Revenues are summed across assets and divided by summed capacity (a capacity-weighted average). Each asset therefore contributes in proportion to its size, and the Index reflects the average revenue earned per MW or MWh of battery capacity active in the market on each day.

1.3 Definitions

• Ancillary services (AS): Reserve products ERCOT procures to maintain system frequency and reliability: Regulation Up, Regulation Down, Responsive Reserve Service (RRS), Non-Spinning Reserve Service (NSRS) and ERCOT Contingency Reserve Service (ECRS).
• Commercially operational: An asset's status from the first day of market activity after its commissioning date, as defined in section 2.2.1.
• Day-Ahead Market (DAM): ERCOT's market for energy and ancillary services for delivery the following operating day.
• Divisor: The sum of the rated power (MW) or energy capacity (MWh) of all commercially operational assets in an Index on a given day (section 2.3.1).
• Duration: An asset's rated energy capacity (MWh) divided by its rated power (MW), in hours.
• Energy Storage Resource (ESR): ERCOT's registration category for battery energy storage. Since December 5, 2025, it combines a battery's charging and discharging activity into a single resource.
• Index value: Total net revenue of the assets in an Index divided by the divisor for a settlement period.
• Net revenue: Revenue from energy sales and ancillary service awards, minus the cost of energy purchased for charging.
• Operating day: The calendar day on which energy is delivered and services are provided.
• Real-Time Market (RTM): ERCOT's market that settles deviations from day-ahead positions, priced through Security-Constrained Economic Dispatch (SCED) about every five minutes and settled in 15-minute intervals.
• Real-Time Co-Optimization plus Batteries (RTC+B): ERCOT's market design change, effective December 5, 2025, that co-optimizes energy and ancillary services in real time and introduced the single ESR model.
• Resource-specific award: A day-ahead or real-time award tied to a named ESR (section 4.3.4).
• Settlement point price (SPP): The price used to settle energy at a resource node, including system lambda, congestion and price adders.
• 60-day disclosure reports: ERCOT's public resource-level DAM and SCED data, released 60 days after each operating day.
• Virtual position: An energy-only or ancillary-service-only award settled at the QSE level and not tied to a specific resource (section 4.3.4).

2. Index Construction

2.1 ME BESS ERCOT Indices

Modo Energy currently produces three Indices which track the performance of battery energy storage systems in ERCOT. These are:

• ME BESS ERCOT: Includes all qualifying assets in ERCOT.
• ME BESS ERCOT (1H): Includes assets with a duration of less than 1.5 hours.
• ME BESS ERCOT (2H): Includes assets with a duration of more than or equal to 1.5 hours and less than 2.5 hours.

2.2 Inclusion Criteria

Assets must meet specific criteria to be included in the indices:

• Commercially operational: Assets must be approved for commercial operations by ERCOT as defined in section 2.2.1 below.
  • Assets that ERCOT reports as retired or mothballed, or that no longer appear in disclosure data, are considered decommissioned and excluded.
• Metering: Assets must not share a meter with co-located assets.
• Active on the day: From December 5, 2025, an asset is included on an operating day only if it appears in that day's SCED ESR disclosure data with a resource status other than OUT or ONTEST in at least one interval. Before that date, every commercially operational asset was included on every day.

2.2.1 Commercially Operational

An asset is considered commercially operational on the first date of market activity following its commissioning date, which is reported in ERCOT's monthly GIS report. Market activity is defined as either the first settlement of metered net energy or the first Ancillary Service award.

Only market activity from this point onwards is used in daily index calculations, and any activity before the commissioning date is excluded.

2.3 Index calculation methodology

The Index calculation is rule-based. No discretionary adjustments are made to calculated revenues or Index values. The limited discretion applied to asset data inputs is described in section 4.2.

The Index value is calculated daily by dividing the sum of revenues of all commercially operational assets (see section 2.2.1) by the sum of their total rated power or energy capacity (see section 2.3.1 for divisor details). This calculation produces an Index value representing a normalized measure of average revenue per unit of capacity for battery energy storage systems in ERCOT.

2.3.1 Divisor

The divisor is a fundamental component of Modo Energy’s BESS ERCOT Indices, acting as a normalization factor to ensure assets of all sizes can be benchmarked against the produced Indices. It is calculated daily by summing the rated power or energy capacity of all assets included in the Index on that day (section 2.2), with rated power based on an asset's nameplate capacity rather than its grid connection. From December 5, 2025, an asset that is offline for the whole day or absent from disclosure data is excluded from both revenues and the divisor for that day. Before that date, such an asset stayed in the divisor with zero revenue.

The divisor is recalculated daily to reflect changes in commercially operational capacity, ensuring the Index continues to represent assets actively contributing to revenue generation.

2.4 Index value representation

All Index values are reported on a net revenue basis per settlement period. Revenue and Index values can be represented using the following units:

• USD/MW/hour (hourly): Calculated by dividing the total index value for the assessed period by the total number of hours in the period (days × 24).
• USD/MW: Calculated by summing the total index value for the assessed period.
• USD/MW/year (annualized): Calculated by dividing the total index value for the assessed period by the number of days in the period and multiplying by 365 to project an annualized value.

2.5 Parameters

The following parameters are set and owned by the Modo Energy US research team, which calculates the Indices.

3. Revenue Components

3.1 Revenue Components of Indices

This section details the key revenue streams incorporated into the ME BESS ERCOT Indices, reflecting the primary revenue opportunities available to battery energy storage systems in ERCOT’s wholesale markets.

The revenue components included in Modo Energy’s ERCOT Indices are:

• Day-Ahead Energy Market: The day-ahead energy market involves market participants submitting bids and offers to contract to deliver or receive power the following day.
• Real-Time Energy Market: The real-time energy market operates continuously, allowing for the purchase and sale of electricity on a real-time basis. This market ensures that electricity supply matches demand instantaneously, in which power prices are calculated every 5 minutes by ERCOT’s Security-Constrained Economic Dispatch process.
• Ancillary Services: Ancillary services are crucial for maintaining grid stability and reliability. . These services include:
  • Regulation Up and Regulation Down: Real-time adjustments to generation to maintain system frequency.
  • Responsive Reserve Service (RRS): Spinning reserves for rapid response to sudden demand changes or forced outages via unit trips, etc. The service is primarily used to help restore frequency to 60 Hz when it falls below given thresholds.
  • Non-Spinning Reserve Service (NSRS): Quick-start (30-minute) reserves for unexpected demand or generation shortfalls.
  • ERCOT Contingency Reserve Service (ECRS): Additional quick-start reserves for sudden demand spikes and rapid changes in supply. Also utilized to provide additional capacity for frequency response in the event of a large frequency event (like a large unit trip).

Prior to December 5th, 2025, ERCOT procured Ancillary Services exclusively in the Day-Ahead Market. Since ERCOT launched the Real-Time Co-Optimization plus Batteries (RTC+B) market design, Ancillary Services are procured in both the Day-Ahead and the Real-Time Markets.

4. Data Sources and Methodology

4.1 Data Inputs and Visibility

To ensure accuracy, Modo Energy only includes utility-scale battery energy storage system resources included in ERCOT disclosure reports in its Indices calculations. These resources are identified in data where the resource type is reported as “PWRSTR” (Power Storage). Data from EIA is also used to provide further context on asset details, such as energy capacity, and to clarify nameplate capacity.

Data priority. ERCOT data takes priority over all other sources. For asset sizing, Modo Energy uses ERCOT data first, preferring steady-state output observed in SCED over Current Operating Plan or marketed values. EIA data is used second, and credible third-party sources (such as owner announcements and regulatory filings) only where neither is sufficient.

Data timing. ERCOT releases resource-level disclosure data 60 days after each operating day. The calculation for each operating day runs once the DAM and SCED disclosure reports and price data are available. No Index values are calculated before then.

Minimum data. An Index value is calculated for an operating day when the SCED ESR disclosure data for that day is available and at least one asset is included in the Index. If the disclosure data or the list of eligible assets is empty, the calculation does not run and is retried.

4.2 Use of Discretion

Revenue and Index calculations follow fixed rules and involve no discretion. The Modo Energy US research team applies discretion only to asset data inputs, in two cases:

• Asset sizing (MW or MWh): Where ERCOT and EIA data are missing or conflict, an analyst selects a value using the priority order in section 4.1.
• Selection of data sources: Where more than one public source exists for an input, Modo Energy selects the source that is most reliable and most relevant to battery operations.

To keep these decisions consistent, the analyst applies the same source priority order (section 4.1) to every asset. Asset capacities and commissioning dates are stored with effective dates, so the inputs behind any past Index value can be traced.

4.3 Revenue Calculation Methodology

Battery energy storage systems in ERCOT operate as Energy Storage Resources (ESRs) - a classification that combines both generation and load activities for the resource. In our Index calculations, we attribute revenue to individual assets based on ERCOT’s operations and market data, and partition revenue streams by service.

4.3.1 Day-Ahead Energy Market Revenue Calculation

Revenues from day-ahead energy contracts are calculated by multiplying the awarded volume (MW) by the settlement point price ($/MWh) at the resource node for each commercially operational energy storage resource. This revenue calculation is in accordance with the method outlined for day-ahead energy resource revenues outlined in ERCOT Nodal Protocol section 4.6.2.1 and 4.6.2.2.

Awarded volumes are sourced from the "Awarded Quantity" field of the resource-specific "ESR_Data" 60-Day DAM Disclosure reports. Following the RTC+B market redesign on December 5, 2025, this field reflects both discharge (positive) and charge (negative) awards for ESRs; prior to that date, charging awards were not available to batteries in the DAM.

4.3.2 Real-Time Energy Market Revenue Calculation

Real-time energy revenues are calculated for each 15-minute settlement interval by multiplying the real-time energy imbalance by the real-time settlement point price (RTSPP) at the resource node.

The real-time energy imbalance is the difference between a resource's net real-time energy and its day-ahead position:

Real-time energy imbalance (MWh) = net real-time energy (MWh) − day-ahead energy sold (MWh) + day-ahead energy bought (MWh)

Net real-time energy is the energy a resource discharges minus the energy it charges within a 15-minute settlement interval. ERCOT settles energy in 15-minute intervals, while SCED dispatches resources about every 5 minutes. A resource can charge and discharge within the same 15-minute interval. When it does, the two offset each other and only the net value is settled.

Before RTC+B (prior to December 5, 2025): Exported energy uses settlement-metered net energy (MWh) from ERCOT. Imported energy uses negative telemetered net output (MW) from the SCED load resource data. This import value (MW) is multiplied by 0.25 to estimate an energy volume import (MWh) value for a given interval. Net real-time energy is exported energy minus imported energy.

After RTC+B (from December 5, 2025): Net real-time energy uses telemetered net output (MW) from the SCED ESR disclosure data, as BESS exports are no longer reported in settlement-metered net energy data. Telemetered net output is averaged across the SCED records in each 15-minute settlement interval and multiplied by 0.25 to estimate energy (MWh) for that interval.

The real-time settlement point price at the resource node is the sum of the system lambda, local congestion price, and additional ERCOT price adders as determined by SCED. For individual asset revenue calculations, the Operational Reserve Demand Curve (ORDC) is treated as a distinct revenue stream, separate from other real-time revenues. In the context of the calculated indices, ORDC revenues fall under the general category of real-time energy revenues.

The revenue calculation described is per the method outlined for Real-Time Energy Imbalance Payment or Charge at a Resource Node, as outlined in ERCOT protocol 6.6.3.1.

4.3.3 Ancillary Services Revenue Calculation

Revenues from ancillary service contracts are calculated based on the responsibility (MW) awarded to a resource multiplied by the marginal clearing price ($/MW) for that given service.

This ancillary service revenue calculation is split between awards made in the day-ahead and real-time markets.

Day-ahead ancillary service revenues are calculated as the hourly ancillary service awards reported in the ESR day-ahead market disclosure reports, multiplied by the hourly clearing price for each service. This revenue calculation follows the method for day-ahead ancillary service payments in ERCOT Nodal Protocol section 4.6.4.

Real-time ancillary service revenues are calculated as the 15-minute averaged real-time ancillary service responsibility multiplied by the 15-minute average real-time ancillary service price for each service. This real-time ancillary service responsibility is the difference between the awards reported in the ESR SCED disclosure reports and the awards reported in the day-ahead market disclosure reports.

Any energy dispatch resulting from utilization in providing an ancillary service is included in the real-time energy revenue calculation. Awards from the supplementary ancillary service market that existed prior to the implementation of RTC+B are not considered.

Following RTC+B, ancillary services can also be transacted through virtual (non-resource-backed) positions at the QSE level; consistent with the treatment of virtual energy trades described in 4.3.4, only resource-specific ancillary service awards are attributed to individual assets in Modo Energy’s Benchmarking solution.

4.3.4 Resource-Specific vs. Virtual Day-Ahead/Real-Time Trading

Two categories of trading can generate revenue across the day-ahead and real-time markets. The Index includes one and excludes the other.

• Resource-specific day-ahead/real-time trading (included): Day-ahead awards tied to a specific ESR in the DAM and reconciled against real-time dispatch under 4.3.1–4.3.3. Arbitrage between a resource's day-ahead position and its actual real-time operation, including cases where a resource sells energy in day-ahead but actually charges in real-time, is captured in the sum of day-ahead and real-time revenues through the power-imbalance term in 4.3.2.
• Virtual trading (excluded): ‘Energy-only’ offers and bids, and (post-RTC+B) ‘ancillary service-only’ positions, submitted at a settlement point without being tied to a specific resource. These positions appear in the "EnergyOnlyOfferAwards", "EnergyBidAwards", or “AS_Only_Awards” DAM disclosure data and are settled at the QSE level. Because they cannot be attributed to individual assets with 100% certainty, they are not included in Index revenues.

Industry usage of the term "virtual trading" is not consistent; some participants use it to describe both categories above. For the purpose of this methodology, "virtual" refers only to the non-resource-backed positions in the second bullet.

4.4 Updates and Revisions

Index values are calculated daily as new ERCOT disclosure data becomes available.

Published values may be revised. This may happen where ERCOT republishes or corrects source data, where more accurate asset data becomes available (for example, a corrected commissioning date or capacity), or where an error is found in Modo Energy's calculation. Revisions are applied to the affected operating days.

4.5 Market Stress and Missing Data

Market stress. The Indices are calculated from settled ERCOT prices and awards as reported, including during scarcity events, price cap periods and Energy Emergency Alerts. Modo Energy does not adjust Index values for extreme prices. Periods of market stress therefore appear in the Indices as they occurred.

Late data. If ERCOT publishes disclosure data late, Index values for the affected operating days are calculated once the data is available.

Missing or incomplete data. From December 5, 2025, an asset that is absent from the SCED ESR disclosure data for an operating day, or reported as OUT or ONTEST for the whole day, is excluded from both revenues and the divisor for that day. Before that date, such an asset stayed in the divisor with zero revenue. Where an asset has no day-ahead award for an interval, its day-ahead position is treated as zero. Where a settlement point price is missing for an interval, no revenue is calculated for that interval. Where ERCOT later publishes or corrects the data, the affected values may be revised under section 4.4.

Changes to ERCOT reporting. Where ERCOT changes the structure or content of a disclosure report (as it did with RTC+B), Modo Energy updates the calculation to use the closest equivalent data. If the update changes the methodology, it is handled under section 6.

5. Governance and Compliance

5.1 Transparency

Detailed explanations of calculation methodologies and revenue components are provided to ensure transparency.

6. Methodology Changes

6.1 Review and Update Process

With the introduction of new products (e.g. markets or services in which battery energy storage systems can earn revenues) and the retirement of old ones, the methodology may be revised to encompass all market opportunities for battery energy storage assets, provided data is available for assessment.

6.2 Notification of Changes

A change is material where it moves any ME BESS ERCOT Index by more than ±2% cumulatively in a calendar quarter. Material changes may be announced before they take effect, with an explanation of their expected impact.

Other changes are non-material and may be made without prior notice.

All changes are recorded in Appendix I with their effective date and the reason for the change.

7. Consistency and Continuity

7.1 Quality Assurance

The calculation pipeline checks its inputs on every run. It does not run if the disclosure data or the list of eligible assets for the period is empty, and it retries automatically. Missing values in calculation inputs are logged.

7.2 Data Integrity

ERCOT disclosure and price data is stored unaltered in Modo Energy's data lake and read directly by the calculation. Revenues are stored per asset and settlement interval, so every Index value can be traced back to its inputs.

7.3 Continuity Planning

The Indices are calculated by an automated data pipeline. If the pipeline fails, values are calculated once it is restored.

8. Limitations

• Contracted revenues are not captured. The Indices measure market revenues only. Tolling agreements, hedges, capacity contracts and other bilateral arrangements are not included, so the Indices may differ from an owner's realized revenue.
• Virtual positions are excluded. Energy-only and ancillary-service-only positions settled at the QSE level cannot be attributed to individual assets and are excluded (section 4.3.4). Some operators use these positions alongside their batteries.
• Real-time energy is estimated. Since RTC+B, real-time energy is estimated from SCED telemetry rather than settlement-metered data (section 4.3.2), as batteries are no longer included in the Settlement Metered Net Energy report in the SCED disclosure data. Small differences from ERCOT settlement statements are possible.
• Data lag. Resource-level data is available 60 days after each operating day, so the Indices are not available in real time.
• Co-located assets with shared meters are excluded. Batteries that share a meter with generation or load cannot be separated in the data and are excluded (section 2.2).
• Concentration. A small number of owners and optimizers operate a large share of ERCOT's battery capacity, so their strategies can move Index values.
• Capacity data. Where ERCOT does not report an asset's energy capacity, it is taken from EIA or other sources (section 4.1). Errors in these sources affect duration classification and the MWh divisor.
• Offline days are excluded. From December 5, 2025, an asset offline for a whole day is excluded from the divisor for that day. The Index therefore reflects revenue per MW of capacity active that day, and an owner with significant outages will earn less per installed MW than the Index.
• Fees and costs are not deducted. Index values exclude optimizer fees, transmission charges, ERCOT administrative fees, degradation and other operating costs.

Appendix I

Methodology changes

Methodology changes are listed below with their effective dates and the reason for each change.

Appendix II

Throughput and cycling calculations

Throughput and cycling do not influence index calculations but are displayed on the terminal to provide additional insights into battery operations in ERCOT.

Throughput measures the energy an asset exports during market operations.

Before RTC+B (prior to December 5, 2025), export volumes are the settlement-metered net energy values for each resource.

After RTC+B (from December 5, 2025), export volumes are estimated from positive telemetered net output (MW) in the SCED ESR disclosure data, using the latest SCED record in each 5-minute interval, multiplied by one-twelfth of an hour to estimate energy (MWh). ERCOT no longer reports BESS exports in settlement-metered net energy data.

Cycling measures how often an asset utilizes its energy capacity over a given period. It is calculated using the formula:

• Total Energy Throughput represents the total exported energy calculated as described above.
• Energy Capacity refers to the asset’s rated energy storage capacity (in MWh).
• Total Days Analyzed denotes the period over which throughput is assessed.

Appendix III

Availability calculations

Availability does not affect index calculations, but it is shown on the terminal to provide additional insights into battery operations in ERCOT. Availability is assessed for each 15-minute settlement interval.

Availability measures the number and percentage of hours a battery asset is reported as available to operate based on its resource status in ERCOT’s 60-Day SCED Disclosure Reports.

From December 5, 2025, an asset is considered unavailable in an interval if its status is OUT (out of service), ONTEST (under testing) or not provided. Before that date, the discharging side was unavailable under the same statuses, and the charging side was unavailable when its status was OUTL (out due to limits) or not provided.

If none of these statuses apply, the asset is marked as available for that period.

Disclaimer

This document, including the methodologies and indices described herein, is the proprietary work of MODO ENERGY LIMITED ("Modo Energy") and is provided solely for informational purposes. These indices are designed for use in financial analysis, benchmarking, and decision-making. However, they do not constitute investment advice or a recommendation regarding any specific financial instrument, asset, or strategy.

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