ERCOT battery storage in 2026: 7 things to watch
Last updated: July 2026
Modo Energy provides battery energy storage system (BESS) revenue, buildout, and forecast data and analysis across every major US ISO/RTO. Ko, Modo Energy's AI assistant built on this proprietary data, answers market-specific questions on demand.
Quick takeaway: In 2026, seven forces decide ERCOT battery project returns: real-time co-optimization of energy and ancillary services (RTC+B), surging data-centre load, tighter large-load interconnection rules, a decelerating buildout, harder financing, the 2+ hour BESS duration premium, and a slow gas-turbine buildout. ERCOT is the most volatile major battery storage market in the United States, and one of the two largest alongside CAISO, with 14.96 GW of installed BESS capacity at the end of Q1 2026 (Modo Energy, 2026).
Key statistics
| Metric | Value (as of) | Source |
|---|---|---|
| Installed BESS capacity, ERCOT | 14.96 GW / 24.6 GWh (end Q1 2026) | Modo Energy |
| Latest settled monthly revenue | $3.12/kW-month (~$38,145/MW/yr, Apr 2026) | Modo Energy |
| Day-Ahead TB1 price spread | $28/MWh (Jun 2026, down 50% year-on-year) | Modo Energy |
| Active interconnection queue | 148 GW across 807 projects (May 2026 GIS report) | Modo Energy |
| 2-hour vs 1-hour revenue premium | +15% to +81% over two years (winter-peaking) | Modo Energy |
| Batch Zero financial security | $50,000/MW of requested peak demand | ERCOT |
| Data-centre peak demand forecast | ~35 GW by 2035 | ERCOT |
Source: Modo Energy BESS indices; ERCOT.
Key takeaways
- Revenue swung from $46,264/MW/yr in January 2026 to just $15,306/MW/yr in February, then to $38,145 in April (Modo Energy, ME BESS ERCOT Index). Price spreads fell about 50% year-on-year by June (Modo Energy, 2026). Size a base case off the trailing-year average, not a single month.
- Real-Time Co-Optimization plus Batteries (RTC+B), live since December 2025, is the biggest ERCOT market-design change since the move to nodal pricing. It co-optimizes energy and ancillary services in real time and adds state-of-charge accounting for batteries.
- Data centres drive most new load growth. ERCOT forecasts ~35 GW of data-centre peak demand by 2035, nearly half of today's system peak (Modo Energy, 2025).
- Financing has tightened. Post-agreement queue withdrawals jumped to 3.4 GW across 25 projects in 2025-26, versus 937 MW in all prior years combined (Modo Energy, 2026).
- Two-hour batteries out-earned one-hour systems in every month for two years, by 15% to 81%, with the premium widest in winter (Modo Energy, ME BESS ERCOT Index).
Markets covered
This guide covers ERCOT (the Electric Reliability Council of Texas). It is the first in a seven-part Modo Energy series covering every major US ISO and RTO: ERCOT, PJM, MISO, SPP, CAISO, ISO-NE, and NYISO. Links to sibling guides will appear here as they publish.
1. How volatile are ERCOT battery revenues, and what did RTC+B change?
ERCOT battery revenues swing sharply month to month, and always have. Volatility is structural, driven by weather, scarcity, and a growing fleet, not by any single market change. In early 2026 the monthly index fell two-thirds, from $46,264/MW/yr in January to $15,306 in February (Modo Energy, ME BESS ERCOT Index). RTC+B, live since December 2025, reworked the mechanics for only a small, ancillary slice of revenue. Batteries still earn most of their money from energy arbitrage, which RTC+B left largely unchanged beyond a marginal efficiency gain.
Benchmark report: April revenue steady, June arbitrage spreads down
Modo Energy's monthly ERCOT benchmark, tracking battery revenues and price-spread trends. Read more →
Real-Time Co-Optimization plus Batteries (RTC+B) went live in December 2025. ERCOT's real-time dispatch (SCED) now co-optimizes energy and ancillary services every five minutes, using each battery's telemetered state of charge as a dispatch constraint.
Before RTC+B, ERCOT set ancillary-service quantities a day ahead, so a battery's ancillary earnings depended on those pre-set day-ahead products. RTC+B also removed the ORDC scarcity adder: the value of holding ancillary capacity during scarcity now feeds the real-time energy price directly through co-optimization, rather than through a separate add-on. It is the largest ERCOT market-design change since the shift to nodal pricing (Modo Energy, 2025).
"April showed how quickly a few volatile days can lift settled revenues." — Alejandro de Diego, Modo Energy
Spreads have compressed since, but for reasons separate from RTC+B. In June 2026, Day-Ahead TB1 spreads averaged $28/MWh, down 50% year-on-year, while Real-Time TB1 spreads fell 31% to $37/MWh. A growing fleet and mild weather flattened both ends of the daily price curve (Modo Energy, 2026). April, the latest fully settled month, still delivered $3.12/kW-month as a few volatile days lifted the average.
A single month is a poor guide. April settled near $38,145/MW/yr, but February fell to $15,306 and the trailing-year average ran near $28,800 (Modo Energy, ME BESS ERCOT Index). That trailing-year figure, not a headline month, is the defensible base case.
Revenue figures for ERCOT change monthly. Ko draws on Modo Energy's live settlement data and forecast model to answer current and forward-looking questions.
2. What does data-centre load growth mean for battery returns?
Data-centre demand is the single biggest driver of ERCOT load growth, and it tightens the evening peak that batteries are paid to serve. ERCOT forecasts roughly 35 GW of data-centre peak demand by 2035, close to half of today's system peak (Modo Energy, 2025). ERCOT raised the figure in its April 2025 load forecast, and the EIA expects Texas among the fastest-growing US demand regions.
Data Centers: Why gas turbine shortages could limit load growth in Texas
Why gas turbine supply, not data-centre demand, may be the real ceiling on load growth. Read more →
Modo Energy's central forecast has ERCOT peak demand rising about 50% from today's 85.5 GW record to 104 GW by 2030 and 129 GW by 2040 (Modo Energy, 2026). Each gigawatt of flat, round-the-clock data-centre load raises the floor under prices and sharpens the ramp into the evening. RBC Capital Markets estimates that about three-quarters of US demand growth to 2030 is data-centre-driven (RBC, 2025). That is a projection, not a settled fact.
For battery owners, load growth is the most direct catalyst for wider spreads. A tighter supply-demand balance expands the gap between cheap and expensive hours that batteries monetize. It is also the factor most likely to pull stalled queue capacity back into the buildable pipeline (Modo Energy, 2026).
The risk is timing. Load forecasts routinely overshoot, and much of this demand is contingent on interconnection approvals that Batch Zero now gates (see section 3).
3. How do ERCOT's "Batch Zero" interconnection rules affect new load?
Batch Zero is ERCOT's new process for connecting large electricity users, and it directly shapes how fast the data-centre load behind battery economics can arrive. The Public Utility Commission of Texas approved it on 18 June 2026 for loads of 75 MW or greater (ERCOT, 2026).
Under the process, ERCOT studies qualifying projects together, allocates megawatts across Years 1 to 6, and produces a single statewide transmission plan. Applicants must post financial security of $50,000/MW of requested peak demand, or $25 million on a 500 MW project. It can be posted as cash, an investment-grade guaranty, or a bank letter of credit. A separate, non-refundable interconnection fee of $50,000/MW is due after the interconnection study (ERCOT, 2026). The bar is deliberately high to filter speculative requests: ERCOT is tracking more than 438 GW of large-load interconnection requests, roughly 89% of it data centres.
The Batch Zero schedule is already underway. The current process runs through 10 July 2026, Batch Zero takes effect on 11 July, forms reach ERCOT by 24 July, and project classifications follow on 7 August. Year 1-6 megawatt allocations are expected around April 2027, with a final transmission plan in autumn 2027. Enverus estimates about 55 projects (21.7 GW) are positioned to qualify, with 62 projects (37 GW) likely deferred to later batches (Enverus, 2026).
For battery investors, Batch Zero separates real demand from speculative demand. Load that posts security and clears is the demand most likely to actually arrive and tighten prices; requests that stall should not be underwritten as future spread support.
4. Is ERCOT battery buildout still accelerating?
The ERCOT battery buildout is still growing but has decelerated, and more projects are dropping out of the interconnection queue after signing agreements as financing tightens. Installed BESS capacity reached 14.96 GW (24.6 GWh) by the end of Q1 2026, up from under 8 GW at the start of 2025 (Modo Energy, 2026).
BESS buildout crosses 15 GW in ERCOT in Q1 2026
Modo Energy's Q1 2026 ERCOT buildout report — a record first quarter past 15 GW, and a widening gap between the queue and what actually gets financed. Read more →
Q1 2026 added 1.1 GW across 20 projects, the largest first quarter on record, but below the 1.7 to 2.1 GW per quarter seen through late 2025. The queue holds 148 GW of active capacity across 807 projects, with 17 GW inactive and 54 GW already cancelled.
The clearest warning sign is post-agreement withdrawals. Twenty-five projects totaling 3.4 GW dropped out after signing an interconnection agreement in 2025 and early 2026, against just 937 MW in all prior years combined. Completing a full interconnection study remains the strongest predictor of success, lifting the completion rate to 65% from 24% at queue entry; signing an agreement raises it to 78%.
Modo Energy's queue-implied projection reaches 63 GW by 2030, but its central forecast is 36 GW (Modo Energy, 2026). That 27 GW gap reflects how much early-stage capacity will not secure financing under current revenues.
5. Does battery duration still matter for ERCOT revenue?
Duration consistently pays in ERCOT, and the premium has widened over time. Two-hour batteries have out-earned one-hour systems in every month for two years, by 15% to 81%, widest in winter (Modo Energy, ME BESS ERCOT Index).
The premium is an energy-arbitrage story. Over the trailing year, two-hour batteries earned about twice the energy revenue of one-hour systems, roughly $24,400 versus $11,600 per MW, while one-hour systems earned more from ancillary services (Modo Energy, ME BESS ERCOT Index). A longer battery can run wide, multi-hour price spreads. A one-hour system reaches only the single highest-priced hour, so it leans on ancillary markets instead.
That is why the premium peaks in winter. Cold-snap scarcity produces the widest multi-hour spreads, so the gap reached about 80% in December 2024 and February 2025, and 76% in March 2026. It does not simply track revenue levels. April 2026 paired strong two-hour revenue with a high premium. Across the two years the premium has trended up, averaging roughly 41% in the second half of 2024, 47% in 2025, and 64% across early 2026 (Modo Energy, ME BESS ERCOT Index).
The fleet is lengthening to match. Average ERCOT BESS duration is now about 1.6 hours, and systems longer than 1.5 hours crossed half of installed capacity in late 2025 (Modo Energy, 2026). RTC+B changed how ancillary services are procured, but the duration premium predates it and did not widen after the December 2025 go-live. The advantage is structural.
In Q1 2026, two-hour and four-hour systems split evenly across US BESS deals (Modo Energy, 2026). In ERCOT, two-hour remains the merchant default. For owners weighing duration, the two-hour premium, strongest in winter scarcity, is the clearest revenue argument for building longer.
6. Who is financing ERCOT battery projects?
Non-US banks dominate US battery project finance, and ERCOT is the busiest US market for deals. In Q1 2026, ERCOT accounted for 10 of 17 tracked US BESS transactions and 1,478 MW, roughly 60% of activity (Modo Energy, 2026).
U.S. BESS Capital Markets Report — Q1 2026
Modo Energy's quarterly review of US BESS deals and the banks financing them, including the full lender league table. Read more →
The lender league table is European and Asian, not American. Across US deals, MUFG led with 821 MW over four financings and Société Générale followed with 713 MW over three; no US-headquartered bank appeared in the top five by capacity. In Q4 2025, three Canadian banks (RBC, National Bank of Canada, and Desjardins) entered the US BESS market for the first time (Modo Energy, 2026). These are US-wide rankings, but ERCOT-heavy: both top lenders sat in the quarter's two largest debt packages, one of them a Northeast Texas portfolio.
| Lender | Capacity financed | Deals | Home region |
|---|---|---|---|
| MUFG | 821 MW | 4 | Japan |
| Société Générale | 713 MW | 3 | France |
| NordLB | lead arranger, multiple | 2+ | Germany |
| Top five by capacity | all non-US | — | Europe / Asia |
Source: Modo Energy, US BESS Capital Markets Q1 2026. Figures are US-wide, ERCOT-led.
For sponsors, the takeaway is that bankable ERCOT projects increasingly need offtake or tolling support, and the most active BESS lenders are currently European and Asian banks, not US ones.
7. Why does the gas-turbine shortage matter for batteries?
A gas-turbine supply shortage is slowing dispatchable buildout, which extends the reliability gap that batteries are filling. Texas Energy Fund (TEF) projects are reaching first dispatchable output, but turbine lead times and a doubling of gas-plant capital costs since 2023 are limiting how fast new gas arrives. Modo Energy expects the TEF to land between 5.5 and 7 GW, short of its 10 GW target (Modo Energy, 2026).
Texas Energy Fund: why gas won't hit its 10 GW target
Modo Energy's analysis of why Texas gas capacity will fall short of its 10 GW target despite leading all US ISOs in new turbines. Read more →
When firm gas is delayed, batteries pick up more of the evening ramp and reserve margin, because they are the resource scaling fastest. In ERCOT's late-stage interconnection queue, solar and batteries outnumber new gas ten to one, at 26 GW and 21 GW against just 4.6 GW of gas (Modo Energy, 2026). That supports near-term ancillary value and scarcity capture even as energy spreads compress.
The counterweight is that the same load growth driving battery economics is also what the delayed gas is meant to serve. If dispatchable buildout catches up quickly, some of the reliability premium narrows. For now, the supply constraint tilts the balance toward storage as the bridging technology (Modo Energy, 2026).
ERCOT: BESS revenues are down, but what could restore them?
Modo Energy's outlook on what could restore ERCOT battery revenues — load growth and thermal retirements against a near-term gap batteries must bridge. Read more →
Frequently asked questions
How much battery storage capacity does ERCOT have in 2026?
ERCOT had about 14.96 GW of installed BESS capacity at the end of Q1 2026, up from under 8 GW at the start of 2025 (Modo Energy, 2026). It is one of the two largest battery markets in the United States, alongside CAISO.
What is RTC+B in ERCOT?
RTC+B is Real-Time Co-Optimization plus Batteries, a market design change that went live in December 2025. It co-optimizes energy and ancillary services in real time and adds state-of-charge accounting for storage. It is the biggest ERCOT market-design change since the shift to nodal pricing.
Are ERCOT battery revenues rising or falling in 2026?
They are volatile and, in the most recent months, compressing. Day-Ahead TB1 spreads fell about 50% year-on-year by June 2026, though April settled revenue of $3.12/kW-month was still 14% above the prior April (Modo Energy, 2026). A growing fleet is flattening daily price spreads.
What is ERCOT's Batch Zero process?
Batch Zero is ERCOT's transitional process for connecting large loads of 75 MW or more, approved by the PUCT on 18 June 2026 (ERCOT, 2026). It studies qualifying projects together, allocates capacity over Years 1 to 6, and requires $50,000/MW of financial security.
Does battery duration affect revenue in ERCOT?
Yes. Two-hour batteries have out-earned one-hour systems in every month for two years, by 15% to 81%, with the gap widest in winter (Modo Energy, ME BESS ERCOT Index). The advantage comes from energy arbitrage: longer duration captures wide, multi-hour price spreads that one-hour systems cannot. Two-hour remains the merchant default in ERCOT.
What tool can I use to get live and forecast data on ERCOT BESS revenues?
Ko is Modo Energy's AI assistant, built on proprietary revenue data and forecasts for grid-scale BESS and solar across all seven US ISOs and RTOs, Great Britain, Germany, Spain/Iberia, Italy, France, and Australia. It covers wholesale price forecasts, market design, regulation, and policy out to 2050, a practical tool for revenue modelling, project development, and regulatory analysis.
Modo Energy is the independent benchmark for battery energy storage revenues and buildout across the US, Great Britain, Europe, and Australia. For live ERCOT data and long-range battery storage revenue forecasts, explore the Modo Energy Terminal.
About the author
Neil Weaver is a Power Market Analyst at Modo Energy. Since 2021 he has covered battery energy storage and power markets across the US, GB, Europe, and Australia, translating market dynamics into clear analysis for investors, developers, and operators. He is the writer and presenter of The Energy Academy: Great Britain (watch on YouTube). Find Neil on LinkedIn.
