ERCOT's 2027 peak demand has fallen 8 GW since the Q4 2025 Market Outlook. The new batch study process raises the qualification bar for large-load interconnection, pushing anticipated data center growth further out in the timeline. At the same time, stronger solar and storage additions through 2026 and 2027, with 41.5 GW expected online in those two years, keep supply ahead of demand and compress near-term project returns.

That surplus is short-lived. As development slows and demand growth persists, the balance tightens. Around-the-clock (ATC) wholesale power prices peak near $128/MWh in 2033 and TB2 spreads reach $136k/MW-year, before settling to $57k by the late 2040s.

This article covers Modo Energy's ERCOT fundamental market outlook through 2049, as of the Q1 2026 release.

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Modo Energy has assessed over 3 GW of battery projects globally, supporting $3 billion in investment decisions. Our U.S. advisory team is available for deal-specific support. For questions about this article or bankability inquiries, reach out to alex.dediego@modoenergy.com.

The full modeling methodology - approach, sources, and backtest results - can be found on our website.

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Executive Summary

• Peak demand reaches 129 GW by 2040, with large loads accounting for 25 GW of that growth. Installed capacity grows nearly 80% by 2040 and more than doubles by 2049 as solar and batteries dominate new builds.
• Solar grows from 16% to 27% of generation by 2035, while coal drops below 10%. Gas retains roughly 38% as it fills evenings and overnight. Batteries expand into overnight dispatch as duration grows, flattening the daily price shape: by the 2040s, the spread between hour 1 and hour 8 compresses to a fraction of its 2026 level, making peak hours scarcer and harder to capture.
• Wholesale prices peak near $128/MWh in 2033. Renewable buildout slows toward the end of the decade, driven by OBBBA capping IRA tax credits for projects starting construction after July 2026, while demand continues to grow rapidly. The mismatch creates the tightest supply-demand balance in the forecast.
• TB2 spreads peak at $136k/MW-year in 2033 and settle to $57k by the late 2040s. The peak has shifted five years later compared to the Q4 outlook, which placed it in 2028, reflecting updated demand and supply timing.
• ERCOT West offers an $11k/MW-year TB2 premium in 2030, driven by concentrated load growth, solar generation, and transmission constraints. The first phase of ERCOT's 765 kV buildout connects in 2030, with the second in 2033, narrowing the HB West premium and converging zonal spreads by the mid-2030s.

Demand growth expectations continue to moderate

Demand creates one of the fundamental opportunities for BESS buildout in ERCOT. Estimates vary widely and have been changing rapidly given recent data center projections. This can make the difference between 50 GW and 100 GW of BESS being economic in Texas by 2050. We have taken a bottom-up approach to forecasting demand that accounts for realities on the ground, rather than developer ambitions.

Peak demand is expected to reach 104 GW by 2030, rising to 118 GW by 2035 and 129 GW by 2040. These figures are slightly below our Q4 2025 estimates, with the revision concentrated in the near term. The 2030 estimate fell 5 GW. The pattern points to delayed interconnection timelines for large loads rather than a structural change in the demand trajectory.

https://modoenergy.github.io/modo-charts/charts/us/ercot/quarterly-outlook-2026-q1/ercot-peak-demand-q1-2026.html