Scenarios

The forecast spans five scenarios covering a range of market outlooks: demand growth, gas buildout, zero-carbon buildout, commodity prices, and battery economics.

Overview matrix

Each scenario adjusts a set of levers relative to the Central Scenario. Bold values differ from the Central Scenario.

Central Scenario

The Central Scenario represents Modo Energy’s view of the most likely path for the ERCOT market. Every lever sits at its base setting, and the other four scenarios are described as deviations from this case.

Commodity prices follow EIA Annual Energy Outlook and CME futures with no adjustment. Texas Energy Fund gas projects slip one year from their announced commercial operations dates, and new-build costs track the NREL Annual Technology Baseline (ATB) Moderate trajectory. Battery energy storage systems (BESS) receive a 30% investment tax credit (ITC) and carry a $35/MW cycling cost, while existing coal units retire on their base schedule.

High Demand Growth (High BESS Revenue)

High Demand Growth models faster electrification and a larger load buildout than the Central Scenario. The scenario applies a higher top-down target for the total data center contribution to ERCOT’s coincident peak, reaching roughly 40 GW by 2033 against 28 GW in the Central Scenario. Data centers are also assumed to run harder, with higher peak utilization and a higher coincidence with the system peak. Named projects from the large load queue are the same in both scenarios, so the extra load is placed on transmission stations that carry large load requests in ERCOT’s planning cases. Texas Energy Fund gas also arrives sooner, with the commercial operations date delay halved to six months.

The extra load tightens the supply-demand balance and raises scarcity across most of the forecast horizon. Higher average wholesale prices and wider battery spreads follow, pulling forward new build across all technologies as the market races to serve demand. This is the most attractive revenue environment for BESS in ERCOT, even though individual nodes or intervals can still price below the Central Scenario.

The chart below combines data center load at its metered peak, after ramping, on-site generation and coincidence with the system peak, with the peak of ERCOT’s large flexible load forecast. Oil and gas load is excluded.

High Gas Buildout (Low BESS Revenue)

High Gas Buildout describes a supply-rich, low-cost world in which gas-fired capacity expands quickly. Commodity prices sit 10% below the Central Scenario, lowering fuel costs across the thermal fleet. Gas is also cheaper to build. Overnight capital costs are reduced by 5% relative to the central trajectory. Texas Energy Fund projects are assumed to arrive on time, with no commercial operations date delay.

Cheaper fuel and cheaper plants combine to bring more gas online than in any other scenario. The added supply suppresses wholesale prices and compresses the spreads available to storage. This is the least favorable revenue environment for BESS, which is why it is labeled the low-BESS-revenue case.

Low Gas Buildout

Low Gas Buildout is the mirror image: a supply-constrained, high-cost world for gas. Commodity prices run 15% above the Central Scenario, raising the marginal cost of the thermal fleet. New gas is more expensive to build, with overnight capital costs 5% above the central trajectory, and Texas Energy Fund projects slip a full two years rather than one.

Pricier fuel, costlier plants, and later commissioning all curb new gas additions. Supply tightens, lifting wholesale prices and widening battery spreads relative to the Central Scenario. The result is a more favorable revenue environment for storage, driven by scarcity on the gas side rather than by stronger demand. The overnight capital cost trajectory for this case is shown in the gas capex chart above.

High Zero-Carbon Buildout

High Zero-Carbon Buildout accelerates the shift away from thermal generation toward solar and storage. Battery capital costs are 25% lower than the Central Scenario, solar follows the more aggressive NREL ATB Advanced cost trajectory, and it’s assumed that batteries capture the full ITC value, starting at 50% in the near-term before stepping down to 40% during the 2030s phase-out, rather than holding steady at the 30% baseline assumption. A lower $25/MW cycling cost also makes batteries cheaper to dispatch.

These assumptions drive a rapid expansion of zero-carbon capacity, which in turn displaces coal. Coal units retire on an accelerated schedule, with decommissioning beginning in 2028 rather than 2030 and aging plants exiting earlier. For storage, the picture is mixed. Building and operating batteries is cheaper, and heavy solar buildout deepens midday price troughs, widening the intraday spreads storage can capture. Two factors offset that upside. More storage comes online as batteries get cheaper, and the added competition compresses spreads. More wind is also built, which depresses evening and ‘solar off’ peak prices, the hours storage relies on most to earn revenue.

Revenue opportunities per scenario

Each scenario builds a different generation fleet, shown by technology on the Generation page, and that fleet shapes differing power prices. The TB2 spread measures the annual revenue available to a two-hour battery from the daily gap between the highest and lowest prices, summed across the year. Spreads widen when solar pushes midday prices far below the evening peak, and compress as more storage competes to capture the same swing.

In the Central Scenario, spreads climb steeply from the late 2020s as data center demand outpaces new supply, peaking near $120/kW-year in 2031, then settle around $70 to $80/kW-year once the build-out catches up. High Demand Growth adds data center demand that the fleet cannot immediately serve, lifting spreads well above the Central Scenario through the early 2030s, to roughly $150/kW-year in 2031, before the accelerated build to meet that demand erodes most of the premium later on. Low Gas Buildout keeps gas turbine capacity scarce and its capital costs elevated, so spreads stay above the Central Scenario through the mid-2030s.

High Gas Buildout eases supply chain constraints on gas turbines and lowers their capital costs, bringing more gas online and flattening the price curve. Spreads are the narrowest of any scenario through the early 2030s, and the lowest on average across the forecast horizon. In High Zero-Carbon Buildout, aggressive solar deepens midday troughs and lifts spreads above the Central Scenario’s peak in 2033. The same scenario builds the most batteries and wind, which compete those swings away and soften evening prices, so its spreads fall back to around High Gas Buildout’s level by the late 2040s.