​Transmission congestion in ERCOT creates sharp differences in battery revenues, with some locations earning substantially higher returns compared to the market average.

Top-performing developers and asset managers understand where constraints in the ERCOT network drive wider price spreads - and how future transmission upgrades are expected to impact them.

This report provides a primer for anyone looking to understand how congestion affects revenues in ERCOT, including:

• How congestion patterns create an East-West divide in opportunity.
• Which positions on the network provide larger congestion-driven spreads - and how this has evolved over the past three years.
• And what future plans for the transmission network could mean for congestion pricing.

To discuss how transmission congestion could impact your battery site, reach out to the author at ovais@modoenergy.com.

The WESTEX export constraint creates an East-West divide in opportunity

​​The largest constraints in Texas are called Generic Transmission Constraints (GTCs).

For most individual transmission elements - like lines and transformers - ERCOT constrains power flow based on “N-1” conditions. This measures whether an element is at risk of becoming overloaded if another element were to fail.

ERCOT’s SCED algorithm ensures all power flows are under N-1 limits to align with North American Electric Reliability Corporation (NERC) standards.

This is not the case for GTCs.

​GTCs are a collection of predetermined lines known to cause stability issues in the system.

The limit across the GTC is set lower than the capacity of the individual elements that comprise it.

ERCOT monitors the actual power flow across GTCs in Real-Time. If the total flow across all monitored elements in a GTC approaches the set limit, the constraint binds, prices are impacted, and generation is redistributed.

They are systemic, long-term bottlenecks in the transmission network.

In ERCOT, the most significant GTC is the West Texas Export (WESTEX) constraint. It is a key reason behind the larger price spreads seen in the West Load Zone.

It has enabled batteries in West Texas to consistently outperform by providing access to more substantial daily arbitrage opportunities.

Why does WESTEX bring higher spreads to batteries in the West?

West Texas is home to 65% of the state’s wind capacity and 28% of its solar capacity, coupled with steady 24/7 industrial demand.

During the day, WESTEX constrains excess power from flowing to larger demand centers further East, such as Austin and Houston.

This causes prices to drop to near-zero on some days.

In the evenings, this trend reverses. Local prices increase around the peak net load ramp hours, when flexible gas turbines and batteries set the marginal price across the system.

This allows spreads to remain consistently highest in the West zone.

The WESTEX constraint provides a persistent congestion pattern that has been in place for several years.

Given its scale, it will almost certainly remain a part of the ERCOT power market into the future.

But this type of constraint is unique. Most congestion patterns tend to evolve more over time.

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Congestion creates winners and losers - but these patterns shift over time

Constraints create varying arbitrage opportunities for batteries across the network. But the top locations are not necessarily the same every year.