The battery energy storage system investment case has entered a new phase in ERCOT - marked by a change in how batteries generate revenue.
Total revenues through the first half of 2025 are about 60% lower than they were in the first half of 2024. Revenues from providing Ancillary Services have declined substantially - driving BESS operators to shift toward energy arbitrage as their primary value stream.
​Given these market conditions, one question is top of mind for investors, developers, and lenders in ERCOT’s BESS space:
What gives confidence in the BESS business case in ERCOT, despite modest revenues and policy headwinds in the last 18 months?
In this article, Modo Energy subscribers can dive into the full analysis, which includes:
- Investment return scenarios across different market conditions and battery durations - the revenue sensitivity analysis shaping capital allocation
- Regional variation within ERCOT - the zonal and nodal analysis informing development strategies
- Cost structure for one- and two-hour systems, along with cost sensitivity analysis - the economic modeling driving technology choices
- Merchant risk mitigation strategies - the contract innovations addressing investor concerns
If you have any questions regarding the content of this article, reach out to the author at alex.dediego@modoenergy.com or any other member of Modo Energy’s US Research Team. To learn more about subscribing to Modo Energy’s research, click here.
