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ERCOT IMM: Load Forecast For 60% Increase In Peak, Which Exceeds Supply, "Suggests A Resource Adequacy Constraint Should Be Applied To The Load Interconnection Process"
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In a 2025 State of the Market Report, the Independent Market Monitor for ERCOT states that load forecasts showing a 60%+ increase in supply, "suggest[] a resource adequacy constraint should be applied to the load
interconnection process so that ERCOT does not approve an amount of new load that is
physically infeasible."
This observation by the IMM was not a recommendation from the IMM
Rather, the observation was included in a discussion of load growth, resource adequacy, and direction for future market design
The IMM's report states, "One half of the RA concern is load growth. Having accurate projections of future load growth is
critical to interpreting RA calculations. The ERCOT footprint has experienced significant shifts
in the past five years with considerable new capacity from wind, solar, and more recently energy
storage resources. Project developers have indicated interest in installing a considerable amount
of new large load in the form of data centers. The projected load for 2030 (base and adjusted
forecast) is between 138 GW and 148 GW with a high scenario value of up to 209 GW. For
context, the 138 GW and 148 GW projections reflect increases of 62% to 74% over current peak
load over a five year period. There is currently a surplus of capacity in ERCOT for normal
weather conditions. However, a 60%+ increase in load cannot be accommodated by current installed capacity. This suggests a resource adequacy constraint should be applied to the load
interconnection process so that ERCOT does not approve an amount of new load that is
physically infeasible."
Under such a constraint, "Projected load in any year that exceeds feasibility can be deferred, rather
than denied interconnection, to allow for generation growth to happen and create room for
additional load," the IMM report states
"Significant increase in load that is physically feasible will still result in higher
energy and ancillary service prices, which will provide signals for new investment in generation," the IMM report states
The IMM report states that, "Two general approaches to applying a resource adequacy constraint in the load interconnection
process are applying real-time operating reserve criteria and applying a multiple of CONE as a
market revenue (cost) cap. Both approaches require market simulation some number of years
into the future. For the real-time operating reserve constraint, a reliability criteria (e.g. PRC <
3,000 MW) and frequency threshold would need to be determined. The same is true for the
market revenue approach (e.g. some multiple of CONE). In either case, simulations would be run
depicting various system conditions and the resulting operating reserve levels or market revenue
would be viewed to determine the acceptable level of new load for each of the simulated years.
Both approaches will allow the market to signal new entry without approving an amount of load
that is physically infeasible. New load that cannot be accommodated in one year can be deferred
to a later year."
While the IMM noted that discussions among stakeholders have raised the potential for policies requiring new load to either be curtailable or to be subject to a bring-your-own-generation requirement, the IMM expressed concern that, "there may be a limit to the extent
the existing natural gas system can accommodate 'bring-your-own-generation' during peak
hours."
The IMM stated, "This suggests that a natural gas availability constraint may be appropriate in developing
load projections."
The IMM's analysis indicates that the ERCOT market could incorporate more than
3 GWs of new peak demand without the annual frequency of shortage conditions exceeding the
norm from 2016 through 2021.
In terms of recommendations, the IMM's report includes only one new recommendation that has not been included in a prior report: Redesign & Improve the Firm Fuel Supply Service (FFSS). Among other changes, the IMM recommends that FFSS eligibility should be limited to resources that can store their fuel onsite
or offsite. Additionally, the IMM recommended that FFSS should use a single clearing structure because it provides
a single reliability benefit
The IMM continues to express concern with the impact of out-of-market actions, and ERCOT's conservative operations, on the price formation needed in an energy-only market
The IMM reported that, "Despite high operating reserve levels in 2025, out-of-market reliability actions increased
substantially from 2024, particularly the Reliability Unit Commitment process."
"ERCOT
operators issued RUC instructions for 5,129 resource-hours in 2025, a 176% increase from 2024.
Congestion accounted for approximately 77% of these commitments," the IMM said
"The increase in RUC commitments corresponds to higher make-whole payments, which
exceeded $21 million in 2025. The increase in make-whole payments can be partially explained
by greater use of RUC and fewer resources opting out of RUC settlement. In 2025, only 3% of resources committed through RUC opted out of RUC settlement, compared to 8% in 2024. Thus,
most commitments through RUC in 2025 were eligible for make-whole payments," the IMM said
The IMM also said that ERCOT’s demand for ancillary services (AS Methodology), "far
exceeds what can be reasonably justified by reliability models."
"The quantities reflected in the
AS Demand Curves (ASDC) are misaligned with reasonable reliability criteria and will make it
virtually impossible for the market to produce substantial shortage revenues," the IMM said
Concerning the competitiveness of the ERCOT market, the IMM said that the percentage of top-quartile net load hours with
a pivotal supplier declined from over 90% in 2022 to 35% in 2025. "This positive development is
due in large part to milder weather and a large influx of energy storage resources held by smaller
participants," the IMM said
"Despite the positive evidence of competitive conditions in the ERCOT market, we continue to
recommend system-wide market power mitigation. With extreme projected load growth in the
ERCOT footprint, the market could become structurally uncompetitive during high-load periods
within a few years. If even 20 GW of new net load appears, a small fraction of the projected load
growth, the operating margin will diminish significantly. This could significantly increase both
the frequency of hours with pivotal suppliers and the opportunity to profitably exercise market
power. Hence, we recommend that ERCOT begin this process soon to have system-level market
power mitigation in place to address the extreme load growth," the IMM said
The IMM's report was filed in Texas PUC Project 34677
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June 1, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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