ERCOT BESS Investment Outlook Report - Q1 2026
The ERCOT battery investment case has shifted since Modo Energy’s Q2 2025 BESS Investment Outlook. Project CapEx fell across all durations, the central revenue outlook for one- and two-hour batteries moved lower, and Modo Energy introduced a high scenario alongside central and low.
Duration has emerged as the decisive driver of BESS investment returns in ERCOT. In the Modo Energy Q1 2026 central scenario, four-hour batteries are projected to achieve an 18.3% pre-tax unlevered Internal Rate of Return (IRR) for a 2027 commercial operation date (COD), up from 16.2% a year ago. Two-hour batteries land at 11.3%, down from 13.5% a year ago. One-hour batteries reach 4.9%, down from 9.4%.
Have any questions or feedback? Contact the author at alejandro@modoenergy.com.
