The state of storage in ERCOT with Brandt Vermillion (Market Lead @ Modo Energy)

Now we just talked about how batteries are are at around four thousand megawatts of installed capacity, and we talked about how that's gonna grow pretty significantly by the end of the year and in the next couple of years. Based on, you know, those two kind of pair those two quantities, you kinda expect saturation to probably start to really happen this year. And if and we've kind of been looking at those numbers and monitoring them over the last number of months here. And the proportion of the different ancillary services that are taken up by batteries does continue to grow. With that being said, saturation probably isn't too far away.

Hello, everybody, and welcome back for another installment of transmission.

In today's episode, guest host Wendell Haltop is speaking to Modo's ERCOT market lead, Brent Vermillion. The conversation takes a look at how storage is participating in the markets in ERCOT, the state of battery build out, and what the future looks like for batteries in Texas. If you're enjoying the podcast, please hit subscribe so you never miss an episode.

Let's jump in.

Hi. I'm Wendell. Welcome to the Transmission Podcast. A very special guest with us all the way from Texas. Is our very own Brandt, our market expert for ERCOT. So welcome, Brandt.

Thanks, Wendell. Good to be here. Yeah. It's my first time in the UK actually this week.

Before we get started, though, I just wanna ask you, you were traveling to Scotland last week. So what was your favorite Scottish thing?

Yeah. So we went to the Isle of Skye and, had a couple of distilleries and, you know, obviously, Scotch was pretty great. Seeing all the Highland cows, all the sheep, all was great. Landscaping itself, pretty unreal. I know that's like four things, but this is a good trip.

So Nice.

I mean, I think that ticks a lot of boxes for Scotland. Yeah. I mean, if we pack into it, the so recently well, I think the end of twenty twenty three, so operational battery storage capacity in Texas sort of exceeded four gigawatts.

And so very sadly for myself, based in, Great Britain, this also means it's kind of overtaken GB operational battery capacity. So I was wondering, yeah, can you just I guess, how do we get here? Like, how quickly has this happened? It seems like it's kind of come out of nowhere.

Yeah. I mean, it is it has happened pretty remarkably quickly. It's if we go back to, say, beginning of twenty twenty one, I think we were around a couple hundred megawatts in ERCOT. We've done about twelve x growth since then.

So now we're sitting around forty one hundred megawatts. So, yeah, just over four gigawatts, like you said. We've gotten a a nice little bump here at the beginning of twenty twenty four. We were more in the mid threes at the end of the year last year.

But, yeah, been pretty crazy growth, and that's that's not really stopping in the in the near future. I mean, this this coming year, by the end of twenty twenty four, I think we'll probably end up doubling once again. So, yeah, double capacity last year. I probably should at least double this year.

I mean, I know some of the more optimistic projections, like, if you look at ERCOT's numbers, it's actually probably a little closer to, like, ten or eleven gigawatts by the end of the year, which is pretty insane growth, obviously. And that's that's talking, like, two and a half times growth. So yeah.

Okay. Yeah. So pretty rapid. I mean, to put that in context, I think in the UK, we're in GB, we've, I think, taken about eight years to get to that four gigawatt mark, which felt like it was pretty quick.

But yeah. So clearly things like accelerating much more quickly. I mean, on that, like, is that kind of expected? Are we kind of where people we I don't know, where we at Modo thought we were going to be, where the industry thought we were going to be?

Anytime you're talking about build out, you always kind of have to couch it with the fact that there are gonna be some buffers either way in terms of projects probably experiencing some delays and whether that's due to maybe some optimistic completion dates or just like hold ups and hold up in the actual construction of the project, whether that's from shortage in transformers or actual supply chain delays in general. I mean, tons of different factors, obviously, that can go into delaying a project. So it's likely that most of the time, projections are gonna be a little bit more optimistic, whether that's just looking at the overall, like, what's in the interconnection queue itself.

But at the same time, I mean, that growth is is still very real. I mean, we're realizing, I guess, most of the expectation, I I guess, is the really the highest level way to put it. If I had to throw a number at it, maybe, like, seventy, seventy five percent of what we would have expected to see built last year ended up getting built. And most of that should still be coming in the future.

It's more just delays rather than cancellation of projects.

Yeah. I mean, if we look at the kind of type of patchy project, which has gotten to gotten to this point, you know, what do they tend to look like? You know, how big are they? What duration are they? And where do they tend to be located?

Yeah. So if we go back to that around four thousand megawatt number, our actual overall energy capacity is about fifty five hundred megawatt hours. You know, getting a little bit bigger than one hour now. I mean, if you look at that on an individual asset level, the largest denomination of asset is still around that one hour mark.

I mean, we know that most batteries aren't exactly one hour or exactly two hours, that type of thing. So it's somewhere in that one to one and a half or just under one hour range is is most batteries in ERCOT still, that's probably, I'd say, around seventy, eighty percent of the installed capacity falls in that range. And if we go to the actual, like, size of cap like, delivery delivery capability, sorry, most batteries at this point are getting to the point where they're actually above fifty megawatts. Whereas if we go back a couple of years, the common the most common size for batteries is a lot smaller in ERCOT, which is obviously as you kind of expect.

As we kind of scale up the industry, the batteries themselves are getting a little bigger. Going from a lot of batteries that are around ten ish megawatts to a lot that are now getting to the point where they're above fifty megawatts in size, if not even above one hundred.

Yeah. I think that's a very similar story to what we've got in GB. And I think I guess that's what really is accelerating the growth of capacity. It's kind of as we start to see some of those mega projects. Like, have we, like, seen any kind of projects, like, greater than a hundred megawatts?

Yeah. There have been some that are greater than a hundred. I think we've had our first two hundred megawatt project, if I can remember correctly. And there are some there are some that have been built that are you kinda have a unit one and a unit two right next to each other that are both, like, one hundred and fifty megawatts in terms of you have two separate units listed.

But really, if you were to look at, like, the entire site and you're together, it'd be over two hundred megawatts. You'd be looking at, like, a three hundred megawatt project. But and then, yeah, to kinda round out that whole triumvirate there, talking about the location element element as well. Batteries are also pretty well dispersed across the entire state.

I mean, you've got a pretty large concentration in West Texas, but, obviously, West Texas is quite a big area too. And then there's a lot of batteries that are kind of populated around the different demand centers in ERCOT as well. So you have kind of the center of the state has three of the major cities with Dallas in the north, and then Austin and San Antonio kind of clustered close together in the center of the state, and then Houston on the eastern part of the state. So there's kind of batteries scattered around those different points.

And then there's also a cluster of batteries down towards the south of the state as well. So really, they're getting built everywhere to summarize that. But yeah. And that's that's kind of expected to continue moving forward.

There are some larger batteries, again, kind of continuing to be built near those demand centers. And then, kind of in West Texas, where you have a lot of industrial demand and a lot of renewable generation, you're continuing to see, pretty significant amount of batteries getting built out there as well.

Yeah. So if we look forward, I guess, like a few years, you mentioned some sort of expectation that we might hit like seven gigawatts, eight gigawatts by the end of twenty twenty four. Yeah. Over the next few years, is that just expected to kind of continue growing, like, really aggressively?

Yeah. I mean, it's harder to say the further and further you get out. But, I mean, if we look at the actual connection queue, we've hit a pretty crazy number recently where it's grown from, I I wanna say, a little bit under a hundred gigawatts in the interconnection queue, which, obviously, already an insane number. I think that was about this time last year, so that's going back about twelve months.

And if we go to today, I think we're at about one hundred and forty gigawatts of just batteries in the interconnection queue. So that's pretty quickly becoming the dominant technology type in the interconnection queue in ERCOT. I think solar's at a little bit over one hundred and fifty, but it's been growing a little bit more slowly than batteries entering the queue. So that's probably gonna become the number one tech tech type entering ERCOT in the near future.

So, obviously, wouldn't necessarily expect all those projects to get built. But, I mean, in the longer run, I mean, a great proportion of those probably are gonna end up coming online somewhere down the line. I mean, it's you know, we might be looking at twenty, thirty, or even later for some of those projects.

But, yeah, I mean, it's gonna be pretty insane to build that for sure.

I guess to put that in context, I mean, what does, like, kind of average, like, peak demand look like in Texas today?

Yeah. So as of today, our record demand last summer, I think in September of last year, was around just over eighty five gigawatts of demand. And then batteries during that same period of time, I think were they re I think they set a record on that same day in terms of their, like, actual maximum net output, and that was just over two two gigawatts. Not exactly a massive chunk of the demand right there.

But then if we go forward into today, just this past weekend, actually, on on Sunday evening, there's a pretty significant pricing event where, actually, with not a too crazy significant amount of demand, I think it was around fifty gigawatts peak demand, Batteries ended up still having their maximum their second I think it was their second highest all time maximum output of around two gigawatts. So if we throw all those numbers into a percentage and kinda go back to last summer versus this summer, it's grown from, a little bit over two percent, I wanna say, of total demand to now we're up to about four percent of total demand in terms of these kinda scarcity events where batteries are kinda helping fill the gap, and they they've gotten up to about about four percent of peak demand.

So we'll see how that plays out in the summer when we get into those larger raw demand numbers. But, yeah, pretty interesting growth in pretty short period of time already here.

Yeah. And it's exciting to see kind of how just how quickly battery storage I mean, we're saying exactly the same thing in GB, kind of how quickly it starts to like, contribute meaningfully to the grid moving away from, I guess, ancillary services, grid services, which previously dominated, which I think takes us on to my next question, which I guess is I mean, you know, if we're seeing sort of all of this growth in capacity in battery and storage, you know, what is underpinning that? Like, kind of why are these projects getting built? Is that is that the value there for these projects?

Yeah. I mean, I think if we just look at the last couple of years, which I I mean, you can say that some of that's driven by some pretty extreme summer temperatures, which I mean, it's always hot in Texas, but the last couple of summers, if you if you are living living in Texas or if you've been there in the past couple summers, you'll know they have been pretty brutal. But that so that kinda helped drive some of that record demand and some of that record demand growth in the last couple summers as well. But that's contributed to some pretty volatile prices, and those volatile prices have contributed some pretty high revenues for battery energy storage.

If we look at twenty twenty three as a whole, I think the average battery earned around a hundred ninety or maybe a hundred ninety five thousand dollars per megawatt over the course of twenty twenty three, which was a pretty significant growth again from twenty twenty two, which I wanna say was around one hundred and forty thousand dollars per megawatt. So both pretty strong numbers. But, yeah, I mean, big growth last year, and a lot of that's due to some of that increased volatility. And what's driving the increased volatility is, like I said, obviously, some pretty extreme weather conditions.

But it's not only that. I mean, we've seen, alongside the build out of a lot of this storage, a lot of alongside the deployment, a lot of the of the storage resources in the state, we've had a pretty significant build out of solar resources as well. Right? So you have growing from, I think, just around five gigawatts and maybe twenty eighteen, twenty nineteen solar generation to now, or cuts up to over twenty gigawatts of installed solar capacity.

If you look at the end of the day, you have these crazy solar ramps, which drive not just, even if demand is staying pretty constant, but if it's at a pretty high level already, you have these really large ramps in what we call net load, right, where it's demand minus wind minus solar generation, where you have basically, the remainder less of those two technology types is the amount of demand that needs to be filled by dispatchable capacity. And when you have a significant increase in that value, you need to have basically dispatchable capacity that can respond quickly and kind of fill in that gap.

And, obviously, that's a big use case for batteries. I think a lot of people that are listening to this are probably already familiar with that. But in the sense that that's not going away, basically, and it's only gonna continue to grow. Those solar ramps, like I said, have only been getting bigger over the last couple of years, and they're only gonna be impacting prices and impacting the system more and more frequently, which kinda means that the use case for batteries performing energy arbitrage and kinda helping to, you know, charge up during the middle of the day when we have all that solar and then discharge as we kinda need to help them fill in that gap of when the solar's going away.

And we kinda need to manage that period of time where demand's still kinda high, solar's going away, we gotta get through the evening into the overnight period. So with that being said, I mean, that that's definitely gonna be a consistent factor going forward. Weather continues to be a factor within that as well. So and that really kind of plays into the magnitude and the frequency in which, like, those significant price events as a result of net load ramps really happen.

So that's the part that's a little harder to predict. But, I mean, I think there's kind of a baseline expectation that they will continue to happen. And it's just kind of a question of how much and how big are they.

You would, like, fully expect to expect that kind of the level of revenues we're seeing at the moment could, well, continue for batteries.

Yeah. So, I mean, I guess the one thing to kind of go back to with that is if we go all the way back to the beginning of what we were talking about with the ancillary service component thrown into it, the ancillary service market is, like we've talked about before, only so large. Right? So you have, I think, around six or seven gigawatts that batteries are typically kinda competing for in the ancillary service markets, and that's across the different reserve services like RS and ECRS, and the frequency response services like regulation.

Now, we just talked about how batteries are are at around four thousand megawatts of installed capacity for how much they could discharge at one given time. Now and we talked about how that's gonna grow pretty significantly by the end of the year and in the next couple of years. So based on, you know, those two kind of compare those two quantities, you kinda expect saturation to probably start to really happen this year. And if and we've kind of been looking at those numbers and monitoring them over the last number of months here.

And the proportion of the different ancillary services that are taken up by batteries does continue to grow. It's kind of a gradual increase as we add more and more to the system. But in a couple of the services, we are getting towards pretty consistent, like eighty five, ninety percent uptake on those services that are being provided solely by batteries. So, with that being said, saturation probably isn't too far away.

And what that theoretically should mean is that a lot of the ancillary service revenue should kinda drop off. It's likely to. It's just, like, if we compare it to GB experiencing that about a year ago, that did cause some pretty significant changes to the revenue stack, for sure. I mean, on some level, we definitely would expect just there's some I don't know.

Credit earning's probably a strong word, but, decrease in revenues for sure on the ancillary service side. But it is a little bit different to GB in its own way, kind of like we were talking about with the volatility component, where that just doesn't quite exist to the same extent here. Right?

So Yeah.

It's been the thing that's kind of really I think a few winters ago, we had we had pretty pretty crazy volatility. But sort of the last few years, as that situation's, like, hit, it's kind of coincided with volatility really just disappearing from the market, which sounds like you expect the volatility to, like, remain.

Yeah. Like I said, I mean, it's it's hard to say how what the magnitude and the frequency looks like. But, I mean, on some level, there should be volatility that that remains in the market, and some of that is also just kind of inherent to the market design itself. And you kind of rely on the scarcity to incentivize some of the generation to show up both intraday as well as in the longer term in terms of actually building new generation.

So, yeah, I mean, in that sense, I think the energy revenue side of things, I think, should remain pretty strong and really should continue to grow as more batteries start to prioritize that as either their main revenue stream because of choice or because they're kind of forced into it because of getting kind of competed out of the market with ancillary services or just there not really being a reason to go into ancillary services.

So, yeah, I mean, I think those energy revenues should stay pretty strong. And, I mean, ancillary services probably are gonna weaken in terms of the revenues you can see from them. But at the same time, I mean, the volatility does show up in the day head market as well. Right?

I mean, maybe not to the same extent that it does in ERCOT's real time wholesale market. But, I mean, if ERCOT is anticipating some level of scarcity condition the following day, you'll see those day ahead market prices kinda rise as well alongside that. So you can see some pretty significant, like, overall daily spreads in the day ahead market on its own. And given that, I mean, prices in necessary services should, you know, still see some sort of uptick on a given day that does have an expected scarcity condition.

I mean, it might might be a little bit suppressed relative to the energy price itself, but, I mean, there's still probably gonna be revenues to be made there. I guess that's the point.

And so I guess just to so yeah. So in spite of the kind of really high price volatility we have, sort of ancillary services are still a pretty core component of batch revenues to date. I mean, so in general, like like in twenty twenty three, what percentage of revenues would have come from those ancillary markets on average?

Yeah. I think if you look at the entire fleet as a whole, it was around eighty five percent from ancillaries. And then if you split that out into one hour and two hour assets, if you look at only the one hours, I think it might have still been probably around ten percent. It might have been even a little bit less. It is kind of interesting if you do look at two hour batteries, which have become a little bit more prevalent in the last year or two. That percentage of revenue from energy has really started to tick up pretty significantly.

I I wanna say in twenty twenty three was it might have been over twenty percent, and I think in the early twenty twenty four numbers, it's it's definitely over twenty percent for those two hour assets. So that transition has definitely started to occur, and it'll be interesting to see kind of how that evolves over the course of the year as we get more batteries online and especially if some of them are also continuing to be two hour assets.

We just go back to the point you made, like, to put it into the context of the sort of effect of saturation we've seen in the GB market. I actually did the the rough exchange rate earlier. So kind of hundred and eighty, hundred and ninety thousand dollars is around a hundred fifty thousand pounds per megawatt a year here, which is what we had in twenty twenty two. And almost since all of that was from frequency response, that was a bit which was driven by wholesale volatility.

But then one year later, we're at third that level and this year, we're we're gonna be kind of probably lower than that again. So that's the kind of effect of saturation here. But like you said, that's kind of been the kind of the the complete drop away in frequency response revenues and the lack of wholesale price volatility. I mean, I think that's kind of interesting to to kind of dig into that wholesale volatility point a bit because, you know, one of the big problems we've had in GB, and I think this is kind of affecting Europe, has been that kind of demand hasn't really been growing.

If anything, it's fallen, especially since some of the kind of, gas price crisis we've had.

And we've just got a lot of capacity online, and so that doesn't lead to good sort of wholesale market volatility at all.

But then it sounds like it's a completely different story in Alcott, like, demand. Is it increasing?

Yeah. I mean, short story is is yes. It's increasing quite a bit. I mean, if we look at twenty twenty two sorry, twenty twenty two to twenty twenty three, so I think the peak demand record as of the end of twenty twenty two was something around eighty gigawatts, which I think had been set earlier that summer.

And, like I was saying earlier, last summer in twenty twenty three, we set a new record of about eighty five and a half gigawatts. So that five and a half gigawatt growth on its own is pretty substantial. And if we look a little bit more into maybe what the long term numbers are saying, ERCOT actually just released an update to its long term demand forecast, which showed some pretty significant revisions. So previously had been, not necessarily flat, but relatively consistent growth the last number of years, which which actually, prior to this past year, was growing at a relatively steady rate of, I wanna say, like, four or five percent per year, which is fairly significant for an electricity system, but not not anything unheard of.

But I think the the recent numbers that they published actually had the twenty, thirty peak demand, almost double what the current peak demand of all time would be. So we're talking about, like, in the one fifty, one sixty gigawatt range, which is obviously, like, insane. But, I mean, it's apparently possible, and if you look at actual, like, interconnection queues of some of the industrial demand that's expected to come online, whether that's data centers or Bitcoin mining or some of the, like, more legacy industrial, like, manufacturing or oil and gas. It's it is pretty stark, the amount of build out that we'd expect to see on the demand side.

What will be interesting to see, though, too, is some of that demand is going to be both more price responsive and some of it's also going to be not necessarily like, obviously we're talking about industrial demand rather than residential demand, so it's not necessarily going to follow a typical demand profile. So it'll be interesting to see how that evolves. I mean, if we go from having a a largely residential demand tenant demand grid or just at least a typical demand profile following type of system to a system that has a significant amount of its demand coming from this industrial load side type stuff.

It's gonna be interesting to see, like, how price response to the demand side is and how consistent it is when prices aren't super volatile. It'll be interesting to see how the generation side kind of evolves alongside that.

Yeah. I mean, those numbers, like, I think I saw them as well, and it kinda seems seems bonkers, but Yeah. It's hard to believe.

It It sounds like a story that's happening across the US really in, like, sharp contrast really to what we've got happening in in Yeah.

Yeah. I mean, I think Texas might be kind of the the outlier to even within the US. But, I mean, yeah, I think it is consistent across a lot of the different ISOs. Some of those demand forecasts have been getting adjusted upwards.

I wanna say I saw some MISO or the Mid Continent or Midwest numbers getting adjusted up pretty recently as well. And I think, like, the PJM numbers or Pennsylvania, Jersey, Maryland numbers getting adjusted up pretty significantly as well from basically being flat to starting to get into that, like, four or five percent demand growth, which again, like, is fairly significant for electricity systems. Yeah. I mean, I think the electrification is everything is a lot of the driver of that as well.

So you're talking about everybody starting to get EVs and just in general, like overall electrification of the country really is certainly a contributor to that as well. Yeah.

Yeah. So if in if by two thousand and thirty, has got one hundred and fifty gigawatts of demand, you know, it's kind of come up a lot. Obviously, there's no capacity market. Are there the tools to kind of get the generation online, to get the flexibility online, battery storage capacity online that it would need?

Yeah. I mean, if it's two thousand and thirty, we'll see. I mean, I think that's going to be tough to get to. But at the same time, there's not only just a lot of storage in the in the queue.

There's quite a bit of solar in particular, but also wind generation that should be coming online. So in terms of meeting that base load requirement, I mean, if you're getting those, like, thirty percent capacity factors from solar generation, and I wanna say the typical numbers are, like, sixty, seventy percent for a lot of the state for wind generation. I mean, theoretically, you should be able to meet a lot of the base load if the build out kinda continues at the pace it is. ERCOT continues to do a really good job with managing the interconnection queue and actually getting projects to the completion stage, then I think meeting the base load is actually fairly feasible in in the sense that it's just going to be, you know, massive renewable renewable build out.

You'll have a ton of batteries there to support it as well. I mean, it's it's in but that's not necessarily a question, right? I mean, it's really the the periods of times where the scarcity plays into things. But But, I mean, that kind of goes back to what I was saying about if you have a lot of price responsive demand, then maybe those, scarcity type of time periods aren't quite as big of a worry, or maybe the solar ramp type time periods aren't quite as big of a worry.

If you have demand that's willing to say, alright, well, prices are rising right now, you know, we kinda have this threshold where at a certain point, we're probably just gonna curtail and just kinda ride this out for especially if it is, like, that shorter duration scarcity period where it's largely just driven by the solar ramp. If it's only gonna last a half an hour or an hour, some of that demand might be a little bit more willing to just say, alright, well, let's curtail for a little bit, just kinda ride this out, and then we'll just come back up as as the prices fall. So it might be might be a bit more manageable.

I mean, eventually, you might see a little bit more of a a generation following electric demand system or electricity system overall or power grid, where currently we kind of have this demand following system where which it kind of has to be. I mean, if you have your generation side and your supply side is is all dispatchable, it's all kind of responding to the demand that it needs to fill, and the demand side is fairly inflexible. If the demand side eventually becomes a little bit more flexible and you have the supply side that's maybe a little bit a little bit more inflexible with a lot more solar and wind generation, then it kind of may need to transition that way a little bit or you might have a bit of an evening out there where you have a lot more of the dispatch or the responsiveness coming from both sides rather than just the supply side.

Yeah. Okay. So it sounds like you might have the tools to kind of manage it in the future.

Yeah. I mean, that's the optimistic take for sure, but I think it's feasible. It's just, you you know, there's a lot that needs to happen. Right? There's a it's a big transition and it's a big build out. Right? So it's there's a lot of moving parts.

I guess, kind of exciting to see and exciting for how, I guess, battery storage can be a sort of big part of that Yeah. Transition. Yeah. I'm just gonna round things off a bit. So if we're at four gigawatts today, I guess it's interesting just to to talk briefly about, you know, who who the companies have been kind of driving this, you know, what type of companies are actually building battery storage.

If we're looking forward to the kind of, like, the growth in capacity that we think will happen? You know, either there's are the same companies that were responsible there, or are we gonna see a bit of a shift in the market with, sort of new bigger players coming in?

Yeah. I definitely think we'll see, some new entrants to the market just by the fact that, we have all this different sort all these different projects that are gonna be coming online in the future. Right? I mean, if they they can't all be built by the same few companies.

I mean, with that being said, some of these companies that are kinda at the top of the install capacity leaderboard, for lack of a better term, Enercon right now have have been building projects pretty rapidly. So, I mean, that includes companies like Jupiter Power, Engie, and Al Green Power. Companies like that are some of them are kinda more traditional utilities, Engie and Enel are you know, they've been in involved in different types of technology types where you've got NG on maybe the more thermal generation side or and Anau has done a lot with wind and solar generation historically. So

you have those types of companies, and then you also kinda have a company like Jupiter that's maybe just focused a little bit more only on batteries at the moment. So I think we'll kind of see a mixture going forward. I mean, we'll see if some of these companies continue to get bought by larger entities of as well, like Jupiter, I think, was it was bought by BlackRock a couple of years ago, I wanna say. They're private equity owned as of now by one of the larger private equity firms in the US.

I mean, that is possible that that may continue as well. I mean, I think it's I think it is an attractive market, so I think we will see a pretty diverse group of group of companies looking to get involved in it, honestly. So yeah.

With that, I mean so to date, like, a lot of those companies have sort of done their own kind of optimization, operate the systems in house. I guess I quickly add, do you think that's gonna remain the kind of status quo? Are we gonna see sort of independent optimizers sort of rise in in ERCOT?

Yeah. I mean, that'll be interesting. I know that there are some that are are trying to make it happen right now. So, again, I guess, kind of to take the easy way out, I think it will be a little bit of a little bit of both.

I think, you know, as we move away from ancillary service dominated strategies, maybe it does get a little bit more complex, in terms of trying to maximize those revenues. And if they're driven a lot more by energy, you kinda have to be a little bit more on the ball in terms of, your short term forecasting and making sure you're kinda maximizing what you're getting out of the system and kinda hedging your risks the right way as well. So in that sense, I guess I could see, you know, maybe some of those more independent or specialist optimizers or operators of batteries maybe seeing a little bit more of an uptick in in terms of their usage.

But, yeah, I mean, we'll we'll see. I mean, hopefully, we'll kinda be able to provide some of the breakdown on on who's who's going out on top in that in that regard. But, yeah, it'll be interesting to see how it evolves.

Cool. I mean, that kind of wraps us up. So my final question, so I guess well, as I kind of caught expert, you used to work in the in the control room. What's your cot contrarian view?

Yeah. I keep keep having to dig these up. I think this is, like, my third one, so I'll keep keep thinking about these. But I think for this time, what I'm gonna go with is the short term the nature of scarcity events is really changing from what it would have been maybe five years ago, where it used to be that you'd have basically, the only time that you'd have severe scarcity happening would have been when you had a significant amount of demand, basically an extreme amount of demand, nearly record setting, you had to basically try to bring as much of your supplies, almost all of it potentially, that you could get online to basically try to meet that demand, otherwise we were gonna go into an emergency condition.

Now, that's not necessarily the case whenever we have price spikes anymore, but at the same time, I do think those price spikes are actually kind of reflective of some amount of scarcity still. I mean, it's it's a very short fleeting moment where it's kind of you're chasing these changes in the in the net demand or the net load. As solar is ramping offline, you're losing quite a bit of generation, and you kinda need to fill that gap with something dispatchable and something that can respond quickly to basically be able to fill the gap to when demand's gonna start dropping off or when you might have more thermal generation available to be dispatched.

It's kind of a a thing where you're threading the needle a little bit, where that didn't necessarily used to be the case. And it's, I guess, it's it's almost like it'd be great if we could just have pricing redone every, like, four seconds or every minute, right, where it's just like you almost need an increased level of granularity to really capture, everything that's needed in the moment. But, I mean, a lot of times, basically, it seems like scarcity going forward is gonna be more on that. And, I mean, you can still have extended periods of relatively high prices, but extreme high prices are probably really gonna only be lasting around that long rather than maybe a more multi hour scarcity event that we would have had in the future.

So I think it is kind of fair to say that these are scarcity events that we've been seeing in the recent history, even if it's on a day where we only have, like, fifty gigawatts of demand. I mean, you have a bunch of different extenuating circumstances that contribute to that, whether that's significant significant generation outages on a given day or actually just kind of relatively warm weather for that period period of the year. But, yeah, I mean, it's it's just kind of it's indicative of the overall change that's happening to the system. Right?

I mean, I I guess I've kinda seen the take thrown around that it's not necessarily true scarcity that we're seeing because it's not a true extreme demand that needs to be met. That's actually struggling. The system doesn't have enough capacity to meet it. Because technically, the system does have enough capacity to meet it.

It's just that threading that needle for that short period of time is is the hard part, and that's that's where there is some amount of scarcity that that does kind of show up.

It sounds like a pretty good reason to get more batteries on the grid.

I mean, I yeah. That's definitely the I my main takeaway is that they really help they really help fill that gap for sure.

Cool. Well, I think that sounds a good way to good way to leave it. Thanks for joining us, Brent, and I hope you enjoy the rest of your week in London.

Yeah. Thanks, Wendell. Thanks for having me, guys.

Alright. And thanks for listening.

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