The installed capacity of Wind and Solar generation in ERCOT has grown to 65 GW in 2025. Planned projects could bring this total to 109 GW by 2030.

But the growing portfolio of renewable generation faces a problem.

Capture prices - the average price at which wind and solar sell energy - are far lower than the levelized cost of energy - the price at which energy must sell to earn a profit.

Sites selling energy exclusively into the wholesale market are unable to make a return on investment.

But this is not a new story.

Renewable projects in the US have historically relied on Power Purchase Agreements (PPAs) for the bulk of their revenue.

Like tolling agreements for battery energy storage, PPAs offer wind and solar projects a route-to-market through an off-taker.

The off-taker provides steadier, risk-adjusted returns - allowing developers to access lower-cost capital to finance and build projects.

Without a capacity market, projects in ERCOT rely on PPAs to hedge against low wholesale prices.

But the majority of renewable PPAs settle “as-produced” - revenues are tied to energy actually delivered to the grid.

When ERCOT directs a generator to curtail its output to maintain grid reliability, this curtailed energy is not delivered and therefore not paid under the PPA.

Curtailment is one of the biggest challenges PPAs do not solve - projects are not paid for the energy they don’t produce.

Curtailment is rising: generators lost 8 TWh of energy last year

In 2024, grid congestion forced ERCOT to curtail over 8 TWh of Wind and Solar energy. This is part of a growing trend compromising PPA agreements. Increasing volumes of generation are unable to be settled with off-takers.