by Jeff St. John
May 15, 2020

Texas grid operator ERCOT is unique in the United States in using an “energy-only” market to keep supply and demand in balance, without a market to secure future grid capacity. That’s often seen as a risky way to run a grid, particularly one rapidly adding intermittent wind and solar power, and it comes with drastic price spikes during times of peak stress like last summer’s heatwave. 

This unique approach is working well for Texas, which continues to absorb more renewable energy while maintaining grid stability, according to a new report from the Environmental Defense Fund. Texas has been able to avoid the over-procurement of largely fossil-fueled generators, a major downside to capacity markets run by grid operators in other parts of the country.

But if ERCOT is going to keep its energy-only approach, it’s going to have to turn to the as-yet-neglected opportunities on the demand side of the supply-demand equation.