Interconnection and BESS development in ERCOT with Ramsey Ayass

- From the top, if you want to connect to the grid in ERCOT, how do you do it?

- It's a level playing field. It doesn't matter if you have an energized gas turbine project that's been there for 30 years, or if you've got a new solar project that's energizing tomorrow, or if you have a battery project that's still in the queue. Everybody is on a level playing field. So regardless of when you connect, there's no concept of "queue position." That really makes developers want to do their homework before selecting a node or a location where they want to connect, because you got to really understand the history and understand or potentially predict what's going to come.

NARRATOR: Hello, and welcome back to Transmission. The unique interconnection process for battery energy storage solutions in ERCOT makes Texas an attractive location to develop storage projects. But what does this process look like? This week, Q speaks with Ramsey Ayass--

Senior Vice President of Grid Strategy at SMT Energy. Over the conversation, Ramsey provides his insight into interconnections, development of storage in ERCOT and further afield, and what opportunities and challenges a developer faces along the way.

As always, if you're enjoying the podcast, please hit subscribe, so you never miss an episode. And with that, let's jump in.

- Hello, Ramsey. Welcome to the podcast.

- Thank you. Good afternoon. How are you doing, Quentin?

- Yeah. I'm good. I'm good. You've got a fine selection of certificates behind your head. Maybe we should talk about those to begin with.

- I appreciate that. So first, we've got my bachelor's of science in electrical engineering from Cal Poly Pomona. I also have my MBA back there from San Diego State University, and I've got two PE certificates--

one for the state of Texas and one for the state of California.

- And so we've got a real engineer on the podcast. We're not going to go too deep on technical stuff today, but it's good to know that we could, if we wanted to. All right. Let's get started with SMT Energy. What is SMT energy?

- So SMT energy, and internally, we say SMT. We're an energy storage developer, and we're focusing on the full life cycle. So developing, building, owning, and operating these energy storage resources. And really, it's anywhere from your small 10-megawatt--

we say small, but utility scale, 10 megawatt distributed generation projects, all the way up to the large 200 or 300-megawatt transmission connected projects.

And right now, our target market has primarily been ERCOT. However, we are branching out into other markets, such as MISO, SPP, WECC, and even the South. So that's SMT in a nutshell.

- And where's the company headquartered? I know you're in Texas.

And how many people are in the company? Where do they work? How many gigawatt hours, do you guys have in development? Let's just put some numbers around it to frame the conversation.

- Absolutely. So we're headquartered in Colorado. And we've got 100 megawatts in operation, 100 megawatts in construction, and then we've got several gigawatt hours in the pipeline. We also have one of the largest DG--

distributed generation fleets in ERCOT.

There are 10 employees at SMT, excluding myself. So a total of 11. Right now, I'm the Senior Vice President of Grid Strategy here at SMT Energy. And I'm also a partner with the firm.

Some of my responsibilities include, anything from interconnection, greenfield, business development, entering new markets, hence the name grid strategy, helping with the actual project development, registration, financing, testing, doing also a little bit of due diligence and M&A since we do have portfolios that we are looking for M&A opportunities.

- And so when we think about SMT, well, you guys started as a solar developer. And now, you have made big roads inwards in the battery world. So what proportion of your time is spent doing solar activities, and what portion is spent doing grid scale batteries. And I'm sure there's a lot of crossover.

- That's a great point. And actually, an easy question for me. So currently, we're not doing any solar. So I know initially we were doing a little bit of community solar and looking at those opportunities.

And my partners, Dave Spotts and John Switzer, they've got extensive experience in the solar industry. But right now, we've shifted to only storage. And as a matter of fact, standalone storage. So not batteries that are co-located with other big solar projects.

- And why have you decided to do that out of interest? Why are you focused on standalone rather than co-location or--

and why have you dropped the solar bit completely?

- Well, we're looking at where the market's headed. And even though we still do need solar and we still see solar as a huge source of growth and a large contributor to the net load ramps that we're seeing here in Texas and in ERCOT, and really, throughout the country. I mean, KISO is a great example. But we're trying to maximize the benefits of energy storage and to really harness that as a part of the energy transition.

And we know it's going to be, an it currently is the future. And so we decided to focus our efforts primarily on energy storage because that' where we want to be in the market. Solar has all these other obstacles associated with it. Like, the amount of land that you need and the permitting. And it's just a lot. And we're hoping to do more, and to do that. We'll talk a little bit about diversifying our energy storage portfolio.

- And you spent a lot of your time thinking about grid stuff. I mean, it's in your job title.

I'd like us to spend some time, if we could, talking about the process of connecting to the grid in--

let's start with ERCOT and then maybe expand into KISO and some other regions. From the top, if you wouldn't mind, if you want to connect to the grid in ERCOT, how do you do it?

- Awesome. And I'll try to be concise, but I'll also give you the developer perspective and also the utility perspective. Because one thing worth mentioning, I spent most of my career working for utilities. So I worked for San Diego Gas and Electric for about 9 and 1/2 years, and then Oncor for two years. So I know the utility side pretty well in several markets.

So first, we're going to start with site selection. So developers, either through consultants or internally, they perform injection studies. And sometimes, area-wide analysis to determine, what's the ideal point of interconnection? So after performing these injection studies, and it's usually done in either PSLF, PSC, or power world.

- What are those things you just said there? What are those acronyms?

- Those are all power flow or load flow software. So what they do is they simulate the electric transmission system using a program.

So what you can do is you can take all these different contingencies. You've heard of n minus 1, n minus 2, and do thousands and thousands of contingencies on every location within ERCOT, for example, and figure out, OK. If a contingency was to happen, what would my injection capacity be?

- Which is, how many megawatts can I get on the system at this point?

- Exactly.

- And it's also a bit subjective, because depending on what your assumptions are for grid conditions, like, is this a summer peak case, is this a light loading case, is it like a--

right now in ERCOT, there's a high renewable min load case, which is considered a stress case, because you have a lot of renewables, not that much load.

So you have to run it through several scenarios to determine what your target battery size or solar or wind project size should be. So that's the first step. And then what you have to look at is the land piece. So you have to talk to the landowners, see if there's interest, if folks are willing to part with their land or come into some kind of agreement, whether it's an option to purchase, option to lease. You look at things like ease of connectivity to a substation, if there's a nearby substation or switching station.

Is there an open breaker position?

Does the utility have any plans to expand the station or install a new station there? You also want to look at whether you want to go transmission versus distribution. So in ERCOT, for example, if you want to size a distribution project, you can't go higher than 9.9 megawatts. And usually, you either connect to a distribution feeder or a circuit, or you'd go straight to the substation and have your own circuit breaker position and dedicated feeder.

On the transmission side, you can just connect to a switching station that has a breaker and a half or a ring bust configuration. Or if you're connecting to a transmission line, what the utility will do is they'll build a new station just for your project.

- And so you're talking about a range of different configurations of connecting to the grid. Whether you're connecting to a substation that already exists, that's got a spare circuit breaker, for example, or connecting to an overhead line that hasn't been connected to there before. We got to build a brand new substation. There's a range of configurations. They all take different amounts of time, of course. And they cost different amounts of money.

And so I imagine what you and the team are doing. You're looking for, there must be some low-hanging fruit, or has it all been taken now?

- Different people will give you different opinions on whether the low-hanging fruit has been taken. And I've got my own opinions on that. I think, for example, ERCOT, it's still ripe with opportunities. A lot of other markets are. And those are the markets that we're targeting. The fruit is probably not as low-hanging as it used to be, but there's still plenty of opportunities there.

So when you do find this site, what you want to do is start developing the project as far as selecting equipment, submitting an interconnection application. And that's really what gets these projects rolling.

When people say, we have a pipeline of x gigawatts or x gigawatt hours, it means that these are projects we've submitted the applications for, either the utility or the ISO or ITO are studying the projects, and they're going through the interconnection process. And depending where you are, the interconnection process could be very long, or it could be relatively quick.

- Could you talk about that for a minute then? So I know there's so many different nuances to this question. So one of the ways that grid operators or grid owners, depending on where you are in the world and how you think about it, one of the ways they can deal with connection requests or applications is they do first in, first out, and you get in a queue, and they assign the resources at the operator or grid owner to do all the load flow studies and injection studies.

And they wait until they've completed one package of work, and then they move to the next and the next and the next.

The problem with that approach, whilst it seems "fair," in inverted commas, you could end up with a queue--

an interconnection queue that is full of, well, projects that might never ever get built. And they waste resources and push everything else down the queue or down the line. What's the approach in ERCOT?

- That's a great point, because you're talking about the cluster study process in places like KISO or MISO or even SPP. And I agree with you. I think that ERCOT does it very well. And in ERCOT, it's a level playing field. So it doesn't matter if you have an energized gas turbine project that's been there for 30 years, or if you've got a new solar project that's energizing tomorrow, or if you have a battery project that's still in the queue. Everybody is on a level playing field.

So regardless of when you connect, there's no concept of "queue position". And that really makes developers want to do their homework before selecting a node or a location where they want to connect. Because you've got to really understand that point in the system and understand the history or potentially predict what's going to come. And I think that's the beauty of ERCOT. Some people get scared, because you're not really guaranteed capacity, you're not guaranteed anything in ERCOT. You just really have to have a well thought out plan and well studied location before moving forward.

- And so what it creates is, it pushes the work onto the developer to be doing load flow studies themselves, ultimately. To put their chips on the table in the right places rather than inundating the RTO or the grid operator or owner. We really get wrapped up in all these different terms, because we've got people around the world listening with different terms.

But inundating with applications, and then swamping them, and then nothing gets done. Can I ask, you operate in most RTOs in the US. And you said at the beginning of this conversation, you understood it from the utility side, which is a unique perspective. What are the high-level differences between the different grids in the United States, between how they handle applications for connections?

- It's the treatment of network upgrades and interconnection facilities. And a great example is like KISO. They have maybe 10 different terms related to network upgrades. There's reliability network upgrades, local deliverability network upgrades, area--

I could go on and on. But each one has its own impact to the project. Some of them are reimbursable up to a certain value, like $70,000 per megawatt, et cetera.

And then some of them are like, no. The developer has to fund these upgrades. And then some of them are put into rate base. So in ERCOT, for example, there's really no concept of network upgrades. You can't really fund your own network upgrades. Now, they're trying to maybe create some protocol to do that. But as it currently stands, what you get is what you see.

If you want to connect here, you do a steady state study, for example. OK. Here are the results. This is what you're looking at. You're either going to be curtailed, you either look good, or it's in the middle. So that's really what I've seen are the major differences. The other differences are the timeline.

So in other ISOs and RTOs, you've got like, let's say, a cluster study and a phase 1 one year. And then the next year, there's a phase 2. And then sometimes, there's further studies, like reassessments or re-studies because other cute projects dropped out, which eliminated the need for this upgrade. So maybe you don't need to pay for that upgrade anymore. So there's a lot of conditionality. And depending on where you're connecting, that could either be highly impactful or not very impactful.

- In the UK, they have this wonderful word to describe it, which is called becoming interactive. So a connection application becomes interactive when somebody else puts one in the same frame or it affects them. And you end up with this cascading effect, and all these time periods that have to count down. And it's all rather exciting really for what is, basically, moving bits of paper around.

I want to just go a bit deeper on what you said there.

So some RTOs in the US have made big announcements about cleaning up or clearing up the interconnection queue. Could you just talk a little bit about those and your opinion on them? What's the impact of those changes?

- Good question. So what you're talking about, we call queue management. And KISO, I think, does a great job of queue management. Historically, when I was back in KISO, there was a time frame where they didn't do as good of a job. But recently, they have been really like cleaning it up and making sure that projects and developers demonstrate milestones and that they actually deserve to be to still be in the queue, and they're not speculative.

So I've been impressed with that. I think what ERCOT does is if they're seeing that a project isn't really moving forward, they'll put it into inactive status. And that's one way to send a signal that this project really is not actively moving through the interconnection process. So maybe we want to disregard it for now.

And I think that's great, because we really do need to clean up the queues in every single location. Because as you mentioned, I mean, they're very bloated, and they're highly speculative.

And I feel like at some point, they're discouraging further investment, because you've got these financial institutions that are going to get scared. People thinking, oh. ERCOT is oversubscribed, or SPP, or MISO, et cetera. And you start seeing those funds get dried up, even though maybe reality is that's not really true. When you see 200 or 300 gigawatts that are currently in the queue, but the peak load of the system is only 85, you get scared.

There's just way too much in the queue to meet the demand. But I would say, out of, let's say, the 300 gigawatts that are in the queue, maybe 40 gigawatts gets built, if we're lucky. Probably less.

- I think we should talk about ERCOT in detail for a minute. Because you mentioned ERCOT a lot just then. I get a sense that, well, I know you guys have got operational assets here. And I get a sense that you're a fan of the process or certain elements of it. Could you talk for a minute about some of the challenges in ERCOT about connecting to the grid?

- In ERCOT, what I love about ERCOT, and it's actually a phrase that was coined by Tyler Norris, who did a white paper on Beyond FERC Order 2023. He called it connect and manage. And that's the beauty of ERCOT. Is a lot of the other ISOs and RTOs, they, I feel like, maybe overthink what it takes to connect generators and do all these network upgrades, and all these conditional network upgrades.

ERCOT, they just connect, and then they figure it out. And it sounds a bit silly, but it works.

And that's why you've got a record level of how quickly projects can go from greenfield to energisation. I mean, the actual interconnection process, like submitting an application, having a kickoff meeting, the utility doing a steady state, short circuit, stability and facility studies.

That whole process, in ERCOT, sometimes takes less than a year. In any other ISO or ITO, you would be very fortunate, if it takes any less than three years.

And that's huge, because, I mean, how are you going to go for financing for a project that's not going to get built until--

I mean, that's just going through the interconnection process. You still haven't started construction, engineering, procurement of long lead time items. That adds another two to three years.

So we're talking, if we're starting development now, a project won't be energized by what, 2030 or 2029? Nobody wants to deal with that level of uncertainty. Versus in ERCOT, even if you submit an application now, you can be unlined by 2027, probably, depending on the location, what the upgrades are, the utility. So that's what I personally love about ERCOT. And I think, hopefully, ERCOT will continue to do that, and maybe even a model for the rest of the country, where it can be applicable.

- I love that phrase, that they will connect and figure it out afterwards. Could you put some more color around what that really means. What does that mean in practice between, say, connecting to MISO versus connecting in ERCOT?

- OK. I'll give you an example, because I feel like that will paint the best picture. So let's say you have an energy storage project that is connecting at a certain location. And at certain times, this energy storage project is studied. It causes overloads, but only for, let's say, 10 hours a year or 20 hours in a full year, which is like, what? 87, 60 hours.

So in another market, that energy storage project has to pay for network upgrades to upgrade certain lines, transformers. And we're talking, some of these can be really expensive. Like 10 million, 20 million, even I've seen $50 million or higher worth of network upgrades. Sometimes, you have to rebuild the whole station.

Now, in ERCOT, you can connect that project.

But in the steady state, it'll say, hey. During certain times in the summer or in the winter or when there's higher renewables, there's scenarios where the project may not be able to generate the full output or charge the full output. But maybe that's fine. Maybe the energy storage project is not going to be charging in the heat of the summer, anyways. Or maybe it's not going to be discharging when prices are not favorable to discharge.

Because when you think of energy storage, you're thinking of arbitrage. You're going to buy low, sell high or charge when prices are really low and sell when the prices are really high. So does it really matter if there is an overload at a time where I'm not even going to be operating the way you're studying me? No.

So ERCOT gives you that power. ERCOT are like, hey. If you want to connect here, we're telling you, these are your results. You make the decision, if you think that's a good investment or not, versus other markets are like, no. You got to pay for these upgrades up front, whether you think it's going to be a problem or not.

- I think the one thing that you said there, which is a principle of how you operate energy storage.

And it just gets forgotten over and over. Is that it your daily operations are countercyclical to system stress. Because when there's too much renewables on the system, you're charging because prices are low. And when there's not enough and you've got system resource scarcity, you are, of course, providing--

you're acting like a generator, which is what the system wants.

And so that's just the economics of the system. Any grid around the world is going to have the same operating pattern. Interesting you say that ERCOT is quite--

I'm putting words in your mouth now, but it sounds quite pragmatic with the way that they actively manage the network rather than just closing the door and saying, no.

- I agree. And by the way, if I'm going to just put my utility hat on real quick, the reason the utilities do this--

and I worked in transmission planning departments at SDG&E at Oncor. I mean, I was doing these studies at the steady state studies. The stability, et cetera. So you're encouraged to study the system at the most stressed time, so that if anything were to happen, you're covered.

Because you already looked at the most stressed situation, which I mean, might work for solar and wind and even conventional generation.

But I don't think for energy storage, it really works, because--

I mean, I mean, FERC order 2023, which is really trying to overhaul this whole interconnection process, it's encouraging utilities to study projects as they will actually be operating. So when you say ERCOT is being pragmatic, I mean, I agree. I think that they're giving the power to the developer to determine whether they should move forward and whether their projects will be financeable.

And then you need, whether it's third party consultants, or you need to have financial institutions that understand the risk they're proceeding with by funding a project. And that way, everybody's on a level playing field.

- And so with your perspective, you've done both sides of this. So you're a poacher turned gamekeeper. Well, actually, your gamekeeper turned poacher, I guess, because you worked for utility first.

If someone was going to ask you to stand up and give your advice to utilities about getting more assets connected, well, firstly, do they want more assets connected? And secondly, what needs to change to make this happen?

- That's a great question about, do they want to have assets connected? It depends on where--

in my opinion. It depends on which part of the country. So in ERCOT, the beauty of or maybe the curse of ERCOT, I don't know, depending on who you ask, is that we've decoupled utilities from owning generation.

So when deregulation happened back in the early 2000s, all of the large utilities had to spin away or spin off their generation footprint. So you had like Oncor and like TXU energy or different--

so where we are now, fast forward to today, you cannot have an Oncor or an AEP or a centerpoint own generation.

So as far as they're concerned, I mean, they don't really care too much about whether they do or don't have generation. I think they want more generation, because it'll increase the resiliency of the system. And it'll also--

whether it's energy storage, whether it's--

I think they like conventional because it's dispatchable, but they, in my opinion, want to have more developers and more generation on their system.

And also remember, the network upgrades and interconnection facilities--

I shouldn't say network upgrade. I should say, interconnection facilities, whether it's new breaker positions, new switching stations. Those all go into rate base.

- Could you explain that? They all go into the rate base. Could you explain that for our international listeners?

- Oh, yes. So when I say go into rate base, I mean that the costs get socialized. So in ERCOT, let's say we wanted to connect a project and it cost $15 million to build a new switching station to connect solar plus storage hybrid. OK. The developer would front up that money through a letter of credit that the utility draws from. And then when the project is commercially operational, that money gets returned or refunded to the developer through the letter of credit, and then it gets socialized.

And when I say rate base, it's because there's a general rate case. And that's how there's cost recovery among the utilities. Is they put it in their general rate case and they recover those costs. So in essence, it is a win-win between the utility and the developer. And the rate payer is like, yes. They do see an increase in their costs. But as more people are flocking to Texas, there's some headwinds and tailwinds.

- And who does the actual work? Because there's a range of different approaches to this. So if you start from the utility or the grid operator or owner's perspective, they, of course, have got very high standards for the quality of their assets. The quality of switchgear, quality of substations. Quality of overhead lines. Quality of all of this stuff. Absolutely makes sense.

And so in some places around the world, the grid asset owner says, right. I'm going to be the only company that's allowed to work on this grid, because only I can be sure that the quality is as high. I've got to inherit this thing and run it for the next 100 years. Only I have got these excellent standards of quality. And so they have these arms of the business that go out and build things. Construction businesses that make that stuff happen.

Now, the problem with that is, there is an issue with pricing, because you don't then have competitive power, competitive tension causing, in good old capitalism, bringing the price down. And so what then you have often happens is you get some approved contractors that are able to go and do the work, and they can bid for the work. How does it work in ERCOT? Let's focus on ERCOT, to start with.

Who does the actual work? And what's the interactivity between the people who do the work and the people who specify the work?

- In ERCOT, and even in other markets, they have a similar approach. There's what you would call transmission interconnection facilities and generator interconnection facilities. So there's usually like a point of change of ownership. And everything upstream of that, think of it as transmission interconnection facilities. So that's the responsibility of the utility, whether it's, let's say, Oncor or CenterPoint or AEP.

And they built that--

as developers, we cannot build it. It's not like, you can't bid it to the market and other consultants.

So they built that to their standards, and that usually includes one pole outside of the substation and the substation itself or the breaker position, et cetera. So anything really that's going to impact them, they have full control over that. And they also, if they want to, let's say, trip us, they could always just open our breakers.

Now, everything on the generator interconnection facility side, so anything outside of that one pole to the substation, whether there is a long gentie or whether you're an energy storage project, that's located right outside of the sub, that's all our responsibility as developers. So we build those to the utility standards, but using our own construction crews and our own folks that, of course, are bankable, fully reputable, and have done many such projects in the past.

- Let's come back to the Summit for a minute. You guys are moving very quickly.

You've got a number of gigawatt hours in the pipeline. What's coming next? Which regions are you focused on? Where are you building assets?

I think it's publicly available. You've got a partnership with SUSI Partners--

- Correct.

- --for asset finance. How does this all fit together? And what are you excited about in the next couple of years.

- So you're absolutely correct. And we're very excited that we're entering the SPP market. We felt like that was a natural move for us. We've been in ERCOT for a while, and we want to stretch our legs a little bit. And we're still going to keep our position in ERCOT. We have several portfolios, especially on the transmission side, that we're either going to go for financing or there's also one that we're looking to sell.

But essentially, SPP is a market that I'm personally doing a lot of research on, and we are in the process of entering that market. After SPP, we're going to go to MISO and also the South. So think [INAUDIBLE].

- We should probably, for our international listeners, just clarify SPP--

Southwest Power Pool, where that is in the US and same for MISO. And could you just do that for a moment?

- Absolutely so. SPP it's the Southwest Power Pool. And typically extends from, gosh, New Mexico to our West.

And it really goes all the way up close to the Canada border. And there's a little bit of interaction between SPP and MISO, which MISO is the Midcontinent Independent System Operator.

And that's, I think, more of like the Midwest. And it also goes like fairly South. So it goes all the way down to Northeast Houston. So MISO actually has a small part of Texas and so does SPP If you go to the far West and the panhandle.

And then MISO goes, like we said, all the way up to the Canada border. And it also borders [INAUDIBLE]

to the East.

So right now, those are the two markets that we're looking at. Primarily SPP. And then after that, we've got the Southern region, like the Southern states like Arkansas and further East. And also the WECC, which is the Western Electric Coordination Council.

- I put you on the spot there with geography and acronyms. And I think you got a 10 out of 10. So very well done.

- Thank you.

- So your focus is going beyond ERCOT to neighboring grids.

And you're still just--

I say just.

You're focusing on grid scale battery, standalone battery. And when are your next projects coming online?

- So the portfolio we have under construction, we've got projects coming online later this year. And we've got projects coming online before the summer of next year, of 2025. And then hopefully, our pipeline--

and we may even have projects in SPP that might be coming online as early as next year. It really just depends on how quickly they can go through the interconnection process. We're testing that right now.

But I would say that 2026 is definitely going to be a huge year. I mean, 2025 is as well. But that's probably going to be a year where very many projects come online.

- OK so we're going to be watching with eager eyes to see what comes next. Now, for the last two questions. The first one is, do you have anything you'd like to plug or anything you'd like to talk about to the energy storage community?

- Absolutely. So I actually have two things. The first one is talking about SMT Summit and our portfolio in ERCOT, we do have a significant portfolio of transmission projects. If there are developers that are looking for some M&A opportunities to perhaps purchase a sizable portfolio of energy storage projects, we do have that in one of our portfolios.

And we also have another portfolio that's out for financing. So if you're also interested in partnering with us, please reach out to me separately and we can get a conversation going. So that's my first plug. The second one is, I am the chair of GridNEXT DFW, which is a local conference here in the Dallas Fort Worth area that I've been chairing since last year. So I took a leadership role in that conference.

It was a great success last year. If you were there, you can attest to that. And it's a quick one-day conference. And we can talk separately, by the way, if Modo Energy, if you all want to join. But yeah. Please stay tuned for details on that. It will happen in October 25 at the University of Texas in Arlington.

- Awesome. You've really capitalized on the opportunity there.

And yeah. Great work.

We'll see you at the conference. Sounds fun.

The last one is a controversial one. So what do you believe? What's your contrarian view? What do you believe that most of the people don't?

- My first contrarian view, which I touched on a little bit earlier, is I believe that ERCOT is going to be a very, very--

an excellent place to continue to develop projects, especially energy storage and renewable assets. When attending [INAUDIBLE]

last year, and even in some of the conferences, like I hear a lot of naysayers say that ERCOT is reaching saturation, I mean, I do maybe agree that the ancillary market is getting close, perhaps to saturation, but there's still plenty of opportunities. And arbitrage is going to be the new thing.

There's also a lot of data centers coming online. Crypto load, hydrogen electrolyzers, artificial intelligence. I mean, this is just the beginning. You heard the ERCOT CEO say that there's going to be over 100 gigawatts of demand here in the next few years.

I think the number was 120 or 130. So I think Texas is a great place. I think West Texas is also a great place. That gets a bad rap, by the way, in the developer and the financial world because of the congestion that you see going from West Texas to the load centers in Austin and San Antonio and Dallas.

But there's going to be a lot of oil and gas growth over there, and a lot of large loads that are siting in West Texas because of this issue. So don't sleep on those locations, on those projects.

And also don't sleep on ancillary services. Because even if it does get to saturation, there will still be a need for ancillary services, especially with this growing load and where ERCOT is headed. So that would be, I think, one of my contrarian views for ERCOT.

For the rest of the market, I think, like SPP a bad rap because they're like, oh. Well, there's not that much load. What are you going to do with SPP? And also, it's a really long interconnection process.

- So can you just put some numbers around that before you carry on. So SPP, what's peak load and SPP, to frame this?

- We're talking about 55 gigawatts. And that's covering like all the states included in SPP.

You got ERCOT, which is just one state that's got 85 gigawatts of peak load. Just so you have a comparative analysis. So because of that, SPP gets a bad rap regarding, OK. If you want to develop projects there, the peak load isn't that high. How does the future look like?

I think even though the peak load isn't that high, there are still a lot of large loads that are interested in connecting in SPP because costs are so low. Also compared to Texas, the costs are low. And there's a lot of energy storage opportunities for arbitrage and ancillaries. So I think, I don't know. That's another maybe contrarian view that I have.

- I mean, it is just classic man in Texas saying a 55-gig grid, or not man in Texas. But the vibe in Texas or in the US that a 55-gig grid is not big enough. And then, of course, if you think about just Great Britain--

the UK, Great Britain is roughly 40-gig peak load.

Of course, very different. It happens in the winter, not in the summer.

And it's an Island with lots of offshore wind. But it's still one of the fastest growing energy storage markets in the world. So there's still a lot to play for in these, what would be considered in the US smaller markets and testament to the scale of grids and the opportunity in the United States.

I want to say a massive thank you to you for coming on, and getting deep into the detail, and being very, very opinionated on things. It's really good to have someone who knows this stuff and really share their thoughts around it beyond just the fact. So thank you very much indeed.

When you're next in Austin, we'd love to take you for a beer.

And we look forward to seeing what happens with Summit in the future. Watch this space.

- Thank you so much. And I really appreciate you all giving us the opportunity to come on this podcast and speak with you. It's been great. I look forward to further collaboration between our companies.

And I'm going to hold you to that. Next time I go to Austin, we'll grab a beer. And if you're ever in the DFW area, likewise, hopefully, you're going to be here for the GridNEXT conference. So excited.

- Yeah. Count us in.

- --for future opportunities.

NARRATOR: Thank you for listening to Transmission, a Modo Energy podcast. Transmission delivers conversations from industry leaders and experts exploring energy markets and the operations and technologies related to grid scale battery energy storage. Check out our other episodes by searching "Transmission" wherever you get your podcasts.

Check out the Energy Academy, our video crash course on how markets in Great Britain and ERCOT work or head to modoenergy.com to see our written research.

Thank you for listening to Transmission a Modo Energy podcast. Transmission delivers conversations from industry leaders and experts exploring energy markets and the operations and technologies related to grid scale battery energy storage. Check out our other episodes by searching "Transmission" wherever you get your podcasts.

Check out the Energy Academy, our video crash course on how markets in Great Britain and ERCOT work or head to modoenergy.com to see our written research.