​Revenues for ERCOT’s battery energy storage systems (BESS) hit record lows in 2025. Through November, cumulative revenues tracked approximately $26.0/kW, and the Modo Energy Nowcast anticipates total-year revenues to land at $29.4/kW. That is roughly half of 2024's $56/kW and one-sixth of 2023's $193/kW. What drove the decline?

​Two forces.

First, 2025 lacked the extreme weather that creates scarcity pricing in Texas. Second, rapid capacity growth saturated Ancillary Services and compressed Energy arbitrage spreads. BESS installations have grown 70x since 2020, with roughly 9 GW arriving in 2024 and 2025 alone.

Key takeaways

• Through November 2025, BESS revenues fell to roughly half of the 2024 total and one-sixth of 2023, continuing a steep year-over-year decline.
• Texas recorded between 61-85% fewer extreme heat days in 2025 than in any recent year. Even at comparable temperatures, 2025 revenues lagged, pointing to structural factors beyond weather.
• As Ancillary Services saturated, batteries shifted toward Energy arbitrage at increasingly lower offer prices, converging toward price levels historically set by gas generation.

In this article, we examine:

• The relationship between weather extremes and BESS revenue outcomes in ERCOT
• How rapid capacity growth affected competition in Ancillary Services and Energy markets
• Shifting battery offer behavior relative to gas generation
• Node-level price dynamics and their implications for BESS profitability

​2025 lacked the extreme weather that drives scarcity pricing

BESS revenues in ERCOT are concentrated in a small number of high-priced intervals. These intervals typically occur during extreme heat or cold, when tight supply-demand conditions push prices to scarcity levels.

In 2025, those conditions did not materialize.

The annual revenue distribution illustrates this difference. In prior years, the 30 highest-revenue days accounted for 44 to 68% of annual totals, with individual days contributing as much as 8 to 9%. In 2025, the top 30 days accounted for just 30%, and no single day exceeded 3%.

The revenue curve flattened because the price spikes that create outsized daily returns did not occur.

​The summer of 2023 featured extended periods where daily highs exceeded their 15-year historical averages, particularly in July and August. August 2024 similarly ran above trend.

In contrast, the summer of 2025 tracked historical norms closely.

​But it’s not just about the averages — the tails of the temperature distribution did not show up in 2025. Last year, only 11 days recorded state-wide average temperatures at or above 85°F. In prior years, that count ranged from 28 to 71. Fewer extreme days meant fewer scarcity intervals.

​Notably, "mild" does not mean average. The 2024 summer was the 5th hottest in the past 50 years by average temperature. However, it ranked just 9th by average daily high. It recorded 52 days with state-wide average highs exceeding 95°F, placing it 12th in that ordering.

For battery economics, the count of extreme peaks matters more than the seasonal average.

Even controlling for temperature, 2025 underperformed

Plotting daily revenues against temperature reveals that weather explains a substantial share of the variance, but not all of it. At similar temperatures, 2025 revenues consistently fell below 2023 and 2024.