The increasing reliance of the ERCOT market on wind and solar energy – a trend that’s evident from the energy generation mix over the last few years, but one that’s bringing unprecedented challenges.

Monthly Energy Generation
Source: Ercot January Report

In our last article, we discussed the impact of extreme weather and the strain it’s putting on the Texas grid. Now, let’s look at what the data is telling us about energy prices and the challenges to come for Texas RECs.

Energy Prices: Texas Trends

At Perceptive Power Infrastructure, we believe in the power of data. We’ve been meticulously gathering and analyzing data on energy prices in the ERCOT market between 2018 to 2023. 

The results are exactly as we expected, and they tell a compelling story.

Firstly, the data shows us that the number of 15-minute segments with energy prices above $90/MWh is highly skewed towards the summer months. This is unsurprising, considering the intense summer heat that drives up energy demand, in particular on days that approach 100°F.

% of 15 Minute segement by year

The revenue split by month and year—as you’d expect— tells the same story.

Revenue peaks follow temperature-driven demand peaks in July and August. And what’s more, these peaks are only getting higher year on year. This represents a growing challenge for Texas energy providers, as they need to find ways to meet this increasing demand without incurring unsustainable costs.

% Revenue by Month & Year

The data also reveals interesting patterns in energy usage by hour. 

As the weather gets warmer, usage shifts to later hours, resulting in extended evening peaks in the summer. This is a stark contrast to the winter months, where we see peaks in the morning and evening.

Average energy usage by hour charts below:

February Hours
August Hours

The opportunity clearly lies in RECs running energy assets that provide less costly energy during these peak times, uninfluenced by market pricing. Particularly in the summer months, this is valuable in serving members at a lower cost or pushing that energy back into the market to offset the cost of high market prices – but more on that later.

Demand drivers in the ERCOT market: What’s causing these peaks?

Understanding the factors driving demand shifts in Texas is crucial for planning and managing the energy supply going forward. We identified two key factors from the data: weather and urban sprawl.


“Winter is about resilience and reliability, but summer is about heat – and keeping the air conditioning running.” 

Our Co-Founder, Scott Tampke sums up the findings perfectly here. Winter extremes can knock down your infrastructure and test the resilience of your supply, but while winter peaks do occur in the morning and evening, it’s the intense heat in the Texas summer that really drives up energy demand and places a different kind of test on RECs.

In the coming years, we anticipate that temperature-driven demand will become even more significant due to the deregulated nature of the ERCOT market.

Urban Sprawl:

Texas’ population surpassed 30 million residents back in 2022 and growth hasn’t slowed since, with population growth rates far surpassing the US average. So what does that mean for energy?

Texas Census
Source: Census

Most of this growth is concentrated in metro areas like Austin and Fort Worth, pushing their limits further into the surrounding rural areas. The result is a shift in the membership demographics of RECs – and RECs have to adapt to the demands of their new members.

Rural loads are becoming more residential, which means increases in demand drivers like air conditioning and charging electric vehicles. That increased air conditioning usage ties right back into the weather factor as record summer temperatures are extending into the evening and lengthening peak demand times.

So, what does this mean for RECs? It means they need to consider how to respond to their increasingly urban, residential membership and meet their changing needs.

Offsetting demand and price challenges: Battery storage vs RECIPs

Two strategies that often come up in our discussions with RECs are battery storage and RECIPs (reciprocating engines). But which one is the most suitable option to tackle the challenges this data is showing us?

Battery Storage (BESS): While a great solution to store excess generation, it’s important to remember that battery storage is limited in duration so can’t provide a continuous supply of power during prolonged periods of high demand, such as during a heatwave. In fact, it’s limited to four hours in duration per day, meaning that alone, it may not be the ideal solution for RECs to offset these most pressing challenges. 

However, the cost benefits of battery storage can be huge. With ITC resulting in 40% bonus depreciation, combined with increasingly reduced supply chain costs, the ultimate cost to RECs to install BESS can be significantly lower than other assets.

RECIPs: The ability to immediately dispatch RECIPs and units that are not duration-limited can be a hugely valuable asset – to RECs, the G&Ts that serve them, and the C&Is that have loads requiring energy at times when wind and solar aren’t adequate. Unfortunately, there are no tax incentives around installing RECIPs as there are with BESS.

Both solutions have their merits – in isolation and in combination with each other or energy assets like PV Solar.

One thing to note is ITC at 40% plus an extra 10%

What this all means for Texas RECs

The data trends and demand drivers we’ve discussed have significant implications for our REC partners and we’re committed to helping you understand these implications and find effective solutions.

Firstly, the increasing demand and price peaks in the summer months mean that RECs need to find ways to control their costs. This is where distributed generation comes into play. It offers an opportunity to balance out the free market that is ERCOT. As our Co-Founder says, 

“This problem is only going to get worse and RECs need to take control of it. That’s what we’re doing. We’re helping them take control.”

Price assurance is, of course, a key concern here. When you can control costs, your members can pay their bills. If RECs can take control of the high-demand months of July and August, the whole outlook changes.

That’s why the most challenging question that RECs face is: How do we serve our members without exposing ourselves to these high incident prices?

And to that end: What is the right combination of energy assets based on what we see today and in the future?

That’s the question that we solve at Perceptive Power Infrastructure. 

We use a combination of deep market expertise, The Perceptive Way approach to understanding your unique challenges, and our detailed financial model to determine the best-fit answer. 

Ultimately, we’re trying to show our partners that BESS (battery energy storage systems) and RECIPs can work together—and in conjunction with renewable assets like wind and solar—to create the most sustainable and reliable energy supply.

Our goal is to provide RECs with energy independence, cost predictability, and sustainability by reducing grid dependency and embracing renewable energy sources. 

So, if you’re an REC looking to navigate the challenges of the ERCOT market and find the right energy mix for your members, we invite you to book a consultation with our team. 

Let’s work together to create a sustainable and reliable energy future for rural America.