April 3, 2024


ERCOT manages the state's electricity grid, covering about 90% of Texas's electric load. This post dives into ERCOT's project queue role as an indicator of the evolving landscape of Texas's energy sector and, potentially, the entire US.

I have received a question: what does this post even mean? So there is some explanation:https://lnkd.in/gabp-QaH

What is ERCOT:
ERCOT, or the Electric Reliability Council of Texas, oversees the state's electricity grid, handling about 90% of Texas's electric load. In simpler terms, they ensure Texas's electrical grid's smooth operation and future planning.

Why pay attention to ERCOT?
Firstly, Texas operates an independent electrical grid, so they have meticulous planning. Secondly, Texas is one of the most rapidly developing states, often setting precedents that other states may follow so that we can expect insights about the future of electrical grids across the U.S. (some average patterns).

What is the ERCOT Queue?
This system monitors and manages new generation, storage, and transmission projects that aim to connect to the ERCOT grid. Projects in the queue undergo multiple stages, which could lead to their approval or rejection. This process ensures that every project is feasible and reliable and won't compromise grid stability.

So, we have 2 uncertainties:
- Projects can be rejected.
- The lengthy process could render a project nonviable.
While it's challenging to predict exactly which projects will be built, tracking the queue allows us to see the grid's future directions (I would say 1-3 years horizon).

This is a reliable leading indicator that signalizes the short-middle trend in Texas and the middle-long trend in other states.

Now, with this knowledge, let's get back to the original post again:

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Top part: And precisely in this post, we can see the increasing dominance of Energy Storage System (ESS) projects, which now rank second in proposed capacity and will overcome solar in the very near future (on the chart below yellow/dark blue colors)

Bottom part: Remarkably, the growth rate for ESS projects is at 80% annually for the last 3 years (compared to solar's 20%), reflecting a mix of rejections and approvals. At the year's outset, the volume of projects (in terms of capacity, not quantity) under investigation is skyrocketing, indicating a fast-evolving landscape in energy storage.

P.S. There will be a post that will explain ESS future in more details.

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