Some of the largest electricity buyers in the world have a message for Texas: charge us. The Texas Energy Buyers Alliance was the first organization to propose that large loads pay transmission charges tied to their approved capacity. The idea is to protect other customers as the grid builds out.
The scale explains why. ERCOT estimates up to 110 gigawatts of new large loads could seek to connect over the next five years, more than double today’s system peak of about 86 gigawatts. Before any of that generation arrives, about $37 billion in transmission costs are already baked into the system, pushing rates up roughly 3.5 percent a year for every customer. The open question is how much of the new bill supports the new demand.
On this episode of the Energy Capital Podcast, Matt Boms talks with Bryn Baker, senior director of policy for organized markets for the Clean Energy Buyers Association and leader of the Texas Energy Buyers Alliance, the state chapter representing large energy buyers. Baker walks through TEBA’s proposal: charge minimum demand charges on large loads at levels that studies suggest would leave other customers’ rates neutral or lower.
Her bottom line on whether growing demand can cover the cost of system upgrades: “We want them to.”
The conversation also works through:
Batch zero, ERCOT’s first group study of new large loads, and the chicken-and-egg problem of qualifying. To secure financing, developers must show results of an interconnection study, which requires a non-refundable security deposit.
The 765 kV build-out, Baker’s case for converting the grid’s two- and four-lane electrical highways to eight-lane highways as the system ages and new demand arrives.
Energy attribute certificates, the tracking system ERCOT’s board approved on June 2 that would let buyers claim any generation source, from nuclear to storage, not just renewables.
How the PUC sets these charges will decide what the next wave of demand pays and what current ratepayers carry as the grid grows.
Timestamps
00:00 - Introduction and who TEBA represents
02:47 - The corporate buyer market and Texas' share
04:13 - Why Texas beats PJM for large loads
06:45 - What data centers offer the average ratepayer
10:02 - The batch process and batch zero
12:25 - Grading the compromise and the qualification problem
15:33 - Transmission planning and the case for 765 kV
19:13 - 4CP vs 12CP and who pays for the wires
23:05 - Energy attribute certificates: the sleeper story
26:54 - EACs and unlocking demand flexibility
28:19 - The EAC program: process, timeline, and what's novel
30:10 - What makes Baker optimistic
32:13 - The real mood in the market
35:16 - Renewables, batteries, and keeping costs down
37:09 - Rethinking economic transmission planning
Resources
People & Organizations
Matt Boms (LinkedIn)
Energy Capital (LinkedIn - Apple Podcasts - Spotify)
Bryn Baker, Senior Director, Organized Markets Policy (Bio - LinkedIn)
Company & Industry News
ERCOT Votes to Streamline Process for Data Centers Looking to Join the Power Grid
Request for Comments on PUCT Draft Report Regarding Transmission Cost Recovery in ERCOT
Large Texas Customers Seek Creation of Energy Attribute Certificate Trading Program at ERCOT
Filings, Programs & Processes Discussed
NPRR1264, Creation of a New Energy Attribute Certificate Program (TEBA’s filing, December 2024; Board Report dated June 2, 2026)
ERCOT Board of Directors Meeting, June 2, 2026 (batch zero and NPRR1264 votes; Dallas Fed economic update at Agenda Item 12)
Rulemaking to Implement Large Load Interconnection Standards, PUC Project No. 58481
Evaluation of Transmission Cost Allocation, PUC Project No. 58484 (the 4CP to 12CP proceeding, December 2026 deadline)
Books, Articles & Reports Discussed
CEBA 2026 State of the Market (full report PDF) — the 143 GW since 2014 figure
Impact of Limiting Solar and Wind Development in the ERCOT Market (Aurora Energy Research for the Texas Association of Business, April 2025) — the 10% household bill increase
Renewables and Storage Will Save Texans $115 Billion Over the Next 15 Years (TEBA study conducted by IdeaSmiths, February 2025)
Related Podcasts by Energy Capital
How Texas Decides Which Data Centers Connect, with Tiffany Wu
What Batch Zero Settles and What It Leaves Open, with Caitlin Smith and Jason Ryan
Text Transcript
Matt Boms: Hi everyone, and welcome back to the Energy Capital Podcast, where we cover the decisions, data, and debates shaping the Texas grid and the energy future. I’m your host, Matt Boms, and today’s guest is Bryn Baker, Senior Director of Policy for Organized Markets at the Clean Energy Buyers Association, and the leader of TEBA, the Texas Energy Buyers Alliance. In this episode, we get into who these large energy buyers actually are, how ERCOT’s new batch process for connecting large loads is shaking out, the transmission and cost allocation debates behind it, and a brand new energy tracking program that ERCOT’s board just approved. This matters right now because Texas is deciding in real time how to connect a doubling of demand without breaking the grid or the market that built it. Let’s get into it. Bryn, thanks so much for joining us.
Bryn Baker: It is my pleasure to be here. Thanks, Matt.
Matt Boms: So, Bryn, I wanna start with who you represent because I think it explains everything else that we’re going to talk about today. There’s an alphabet soup here, TAEBA, TEBA, one letter apart, but behind your acronym is a membership buying serious amounts of power in Texas. So let’s get it on the record. Who is TEBA?
Bryn Baker: Well, absolutely. Perhaps the first thing that we should start with is clarifying that you and I actually don’t work for the same organization. I think sometimes people say, TEBA, TAEBA, is that like potato, potato? But your organization has an extra A for advanced. The B in TEBA stands for buyers because that’s really the DNA of the organization. We represent large energy buyers. In fact, some of the largest energy buyers in Texas and in the world. TEBA works with about a fifth of the Fortune 500 and collectively membership is about 36 trillion in market cap. So these are the largest of the large, but we also work with smaller buyers and employers across the state. TEBA is a state chapter of the Corporate Energy Buyers Association, which collectively we work with businesses across every business sector from retail and technology, manufacturing, oil and gas, consumer products, financial real estate companies, but we also work with the supply side of the market in our membership to be able to make all of these energy transactions happen. And so working with small and large employers across the state, we’re working on the basics. It’s reducing energy costs. It’s protecting the state’s competitive energy market. It’s ensuring that our power infrastructure meets the state’s future needs.
Matt Boms: So before we get into the policy fights, I want listeners to have a sense of scale because I think most people underestimate this. When we talk about corporate energy buyers as a market force, how big is that really? And where does Texas sit in it?
Bryn Baker: Well, I think in a short summary, it’s large and growing. We just put out a state of the market report that now tabulates that large corporate buyers have publicly announced contracts for 143 gigawatts of new utility scale clean energy capacity since 2014. That’s nationwide. But fully one third of that is in Texas. That’s about 48 gigawatts. And that’s announced capacity. About half of that is now operating. What’s notable is that despite some headwinds, the pace of procurement is picking up. And it’s picking up particularly in the area of clean firm power, which is any combination of nuclear storage, geothermal, low carbon gas. But large energy customers are actively exercising their demand pull. Which is having a sizable impact in driving new generation into the market. Now that’s the demand side. I think we’ll probably get into the demand additions that we’re talking about and how we think about that.
Matt Boms: Yeah, it is interesting, Bryn, thinking about Texas and PJM, every interconnection queue in the country is swollen right now, but these two are really in a league of their own and they’re competing for the same projects. So help make the case here. Why does a company with a gigawatt scale load pick ERCOT over PJM?
Bryn Baker: I mean, it does seem like Texas and PJM are locked in a duel on who will be able to meet the magnitude of large loads looking to come onto the system. Texas is a magnet for large electricity users. And of course, it’s not just data centers. It’s really important that we recognize that these large loads also include oil and gas expansion, advanced manufacturing. I mean, semiconductor manufacturing, those are huge facilities. But Texas is the magnet because it uniquely combines low-cost power, a favorable, flexible market structure, and fundamentally a pro-business environment in a way that few other states can match. It is the cheap, abundant, diverse power. Yeah. ERCOT’s market design creates speed and flexibility. And it’s that ability to directly contract for power within a business-friendly environment that makes it possible for businesses to move fast, design their own power strategy. That’s what really fundamentally what makes the state attractive for investment. But of course, Texas has a natural advantage in terms of land and scale and siting, you know, the kind of land availability that lets you think in gigawatts and not megawatts. And of course, Governor Abbott has touted Texas as the epicenter of artificial intelligence development. We think about that as fundamentally a generational opportunity for data centers to help finance. A modernized and expanded grid for everyone. Let’s remember that a significant portion of Texas transmission lines, for example, date back to when they were first built in the 1960s. So grid hardening, storm recovery are all significant drivers of increasing costs that will need to be paid for. That’s independent of these large load additions. I hope we’ll come back to that, but it’s about positioning the state to lead in the nation’s ability to lead in the AI race. And whether you like that that’s happening or not, we need to win it. So this is part of a broader national imperative that has national security implications as well as sort of fundamentally the chance for Texas to continue its economic leadership.
Matt Boms: Yeah, you mentioned the AI race and I wanna stay on data centers for a minute because that’s where the public conversation gets really heated. Yeah. Here’s the question I hear from regular Texans. My bill is going up and now these massive data centers want to plug in. Why should I be happy about that? What do these large loads actually offer the average ratepayer? And is their anxiety wrong?
Bryn Baker: I mean, starting with what do the data centers have to offer? There’s a huge amount that we can all capture in terms of broader benefits. The data centers want access to reliable power, they want to be grid connected, they want to pay their fair share. And policymakers and the rest of us can benefit from that because what they’re bringing is capital, load growth that justifies long-needed and long-lived grid assets, and tax revenue that supports schools, roads. Bridges and certainly other local services. I think this often ends up being a black and white discussion. Do you like these large loads or not? I think a big part of this is recognizing that we live in a digital economy. What these data centers enable is banking, hospital services, national security services. If you want your digital payment to go through or find your way on Google Maps or call 911 or stream your favorite show, you’re using a data center. So much of our daily lives now is directly enabled by cloud or data center infrastructure. And it’s those growing needs of the baseline digital economy that are such a huge piece of what’s getting built out. Now, of course, AI training and inference is now the bigger piece of growing data center loads, but this just ties back to that broader and imperative that we win the AI race. And the important opportunity is that the level of investment flowing fundamentally presents an opportunity to have these loads help pay for infrastructure that we all need and benefit from. There’s billions of dollars that are going to flow here somewhere. And both baseline modernization and upgrades on what is needed to serve these new loads are all part of the mix. It’s about the basic math of spreading fixed costs in the system across a broader base. And when you do that. It has the potential to neutralize or potentially even decrease what are otherwise increasing costs for other customers, including residential customers. I think fundamentally, when we think about why did we establish TEBA in the first place, it was because we were worried about at the time legislative action for closing some of the cheapest, fastest generation options to build in Texas. And fast forward to today, storage and renewables are still some of the fastest, cheapest resources to. Provide new power. So we cannot afford literally to cut off options, narrow the market when we need every available megawatt to expand the market to enable speed to power. And just like the grid needs a diversity of generation, energy buyers need a diversity of pathways to meet their own needs. So this is really about preserving flexibility in the market and expanding options across generation, transmission, and certainly. demand side solutions rather than narrowing them.
Matt Boms: Yeah, that history matters because the fight over options is about to run head on into the biggest interconnection challenge that ERCOT has ever faced. So let’s get into the batch process. For folks who haven’t followed this, the old way, ERCOT studied each big new load one at a time and one after another. At these volumes, that just breaks. So ERCOT is moving to studying loads in batches. And the first one, batch zero, is the billion dollar question in this market right now. Who’s in, who’s out, how big it gets. So walk me through it. What is batch zero actually, and how big is it shaping up to be?
Bryn Baker: I mean, first, being a grid operator is probably one of the least appreciated jobs, even though it’s the thing that keeps the lights on and the entire economy going. So it feels like an understatement to say that the stakes are high as ERCOT navigates creating a batch process to study and approve new loads rather than serially processing them, because that’s just unworkable at these volumes. There’s a lot of regulatory complexity here. And it’s been really hard for the loads to figure out whether and how they qualify for this first batch known as batch zero. And y’all had on Pablo Vegas and Tiffany Wu and others on explaining those dynamics and sort of the details of the batch process itself. So that’s required listening to understand sort of the why and the what of the batch process. But literally the billion-dollar question is who. is getting into this initial batch zero. And it’s a bit of a moving target. We heard ERCOT state at the June 2nd board meeting that they estimate that about 35 gigawatts of new large loads are likely to qualify for the base case, which they’re calling firm loads. And then they have the second category known as studied and allocated loads, which they estimated about 65 gigawatts. Rumors were flying for a while that batch zero was much smaller. That amounts to a top end of 110 gigawatts of new loads over the next five years, keeping in mind that that’s roughly doubling the current system peak at about 86 gigawatts, but that’s a significant amount of new large loads. And so I think in terms of where the overall direction is going, that’s viewed as pretty positive.
Matt Boms: So we’re talking about studying enough new demand to roughly double the Texas grid in about five years. And there’s no precedent for that. The rules for how all this works got written really fast. The board approved them after what everyone would agree was a sprint, not a marathon, which is very impressive. And also the kind of process that leaves loose ends. So I talk to member companies as well, and what I hear is a mix. There’s some relief that there’s finally process at all and a lot of nervousness about what the fine print means for their projects. So I want your honest grade now that the rules are approved, is anyone actually happy with where this landed? And on the load side specifically, what are the open questions your members still have about how you actually qualify for a batch?
Bryn Baker: Yeah, I mean, I suppose a mark of a compromise is that everyone leaves a little unhappy. And I think that’s what happened here. There was a rapid, turbulent process, but Texas is at the tip of the spear here. And so I think starting, there are some congratulations just for moving fast that are in order. We have a process to work within. It came together remarkably fast. I think there are a couple things that we’d like to see some ongoing attention and discussions to. Transmission is a big one. And how do we do that better and in a more integrated way? I think the top line point coming out of ERCOT’s approval of the rules around batch zero is that fundamentally there are still some real questions from the load side on how you qualify for batches, because even if you have your initial studies to qualify for batch zero and project developers can post the financial security and demonstrate site control, there are these other criteria. Like projects have to have a general contractor, contracts with a tenant, zoning approval. And you end up with a little bit of a chicken and egg situation. Large loads can’t determine project viability without the interconnection study results, and transmission planning can’t move forward without viable real projects. Developers may be asked to post significant, increasingly non-refundable security to enter studies, but they can’t secure financing without the cost and the timing certainty that those studies provide. So there are projects that technically qualify for batch zero, but then there is a question of can they meet the other upcoming deadlines this summer without actually knowing what amount of capacity they could get? So we’re likely to see that top line number sort of shave off, perhaps significantly. It sounds like we’ll know who qualifies by August 7th. And some will say that that’s the process of weeding out speculative projects as intended. It does do that, but we also know. That it is cutting out real viable projects, some that have had long-standing interconnection requests. So I think there are some outstanding questions of how objective the now approved standards are. And of course, capital depends on trust and that the rules are applied consistently. And so clarification as we continue to go through this and refine it and gather learnings is going to be needed, especially as we go into batch one.
Matt Boms: You’ve now mentioned transmission twice as the thing that needs attention. So let’s go there. And I want to ask about the big wires specifically. ERCOT’s been talking about the 765 lines, the biggest transmission build in the state’s history, converting the backbone of this grid to a completely different scale. So let’s make the case here. What do these new large loads have to do with it?
Bryn Baker: Yeah. And so if I may, I might just back up a little bit and do a little bit more of the setup for why do we need those particular transmission lines? Because I think when we think about the batch process, the second piece of this that is gonna need some ongoing attention is how do we do better transmission planning in this much more dynamic environment than we’ve ever seen before? So you had Eric Goff and others describing the amount of demand driving all of this as effectively infinite. Yeah, of course it isn’t, but the point is that the constraint. Is really how fast the supply side can meet that demand. How fast can we build infrastructure? And so the biggest thing that we think ERCOT could have done to add more load and still achieved reliability and lower transmission costs would have been to include loads that were studied under the existing transmission planning process known as the regional planning group. And what we understand is that some of those loads are included in batch zero. ERCOT Had about 40 gigawatts in a bucket of loads studied in recently approved RPG transmission projects. But there’s overlap with the loads that they estimate will qualify via large load interconnection studies. So it’s likely that some of the transmission capacity linked to loads studied in the RPG process will be reallocated to different loads that qualify for batch zero. And we argue that those projects should be included because transmission capacity is being planned for them. And transmission capacity is the infrastructure bottleneck. So we would argue that you would not energize those loads studied under RPG unless or until that transmission capacity becomes available, sort of addressing any underlying reliability concern. Now, of course, there’s broader concerns about sufficient generation coming onto the system. We can talk about that because there’s a huge queue. And this is one of the success stories of Texas as a whole: the ability to bring on huge amounts of new generation quickly. But sort of the broader point is that much more comprehensive planning is going to be needed to connect these anticipated loads with generation and with transmission, because it’s all interdependent. And you know, the good news, I think, is ERCOT is now saying that they plan to overhaul how transmission is planned and put it all within the batch process, which is an important opportunity for us to do all of this in a much more integrated fashion. So that’s sort of this batch process coming into how we have been talking about transmission as a whole. So what are the needs driving 765? You know, back to your core question. I think starting with transmission and cost allocation is one of the most consequential policy debates in energy right now. Transmission is the bottleneck to getting more loads onto the system. But we also are making significant investments in this aging system, both for general grid updates and for grid hardening, for storm recovery due to extreme weather. And so before we even get into large loads, We should be looking at what are the most cost efficient and multi-value solutions. And so that’s a big part of why we’ve made the case that we need to convert the electrical equivalent of two and four lane highways to eight lane highways with these 765 lines. And so now you bring in these large loads in the batch process. And so that gives us the opportunity for us to talk about all of this in a much more integrated way.
Matt Boms: Two lane highways to eight lane highways. That’s the clearest version of the transmission case that I’ve heard, Bryn. So now we’ve arrived at the fight I promised we’d get to, which is who pays for all of this? And I want to slow down here because this is the part where the acronyms start flying and normal people tune out. And this fight, maybe more than anything else we’ve talked about today, really lands directly on people’s bills. So let me try the plain language version and you correct me where I get it wrong. Today, Texas divides up its transmission costs using something called 4CP, four coincident peaks. Now, the grid looks at the four highest demand moments of the summer, one in each month, and your share of the transmission bill is based on how much power you were using in those exact moments, which means if you’re a big sophisticated load and you can power down during those peaks, you can shrink your transmission bill dramatically. And the costs you avoid. Get picked up by everybody else, including residential customers who really can’t play that game. So that’s the cost shift worry. And now the commission is looking at moving from 4CP to 12CP, 12 peaks spread across the entire year. So 4CP versus 12CP. 90% of our listeners just heard the alphabet soup, but this fight decides who pays for $30 plus billion dollars of wires. So help break it down for us. What’s the debate and where does TEBA land?
Bryn Baker: The commission staff in recommending moving toward 12CP were certainly searching for a middle ground compromise in addressing the core underlying concern that there was a cost shift happening where residential may be paying more for transmission than they should. And so what 4CP does is it favors consumers that can actively manage their peak and it incentivizes flexibility. But fundamentally that there’s a Really important element to that because having large loads respond when the grid is stressed is a service that we all benefit from. 12CP shifts toward more average consumption based allocation. And so this does help residential consumers. The more CPs you add, the more you’re just moving toward an energy consumption based allocation. And so this was sort of in the middle, but the thing that we generally agree with is that the proposal is to create tiers so that. Large loads over 75 megawatts also now have an element of their bill that is made up by minimum charges. And this is actually a really important concept because as I mentioned, there’s a huge amount of transmission investment headed toward Texas just in the base case. In fact, it’s about 37 billion in transmission cost just baked into the system. And so that means that costs are going up about 3.5% per year on average for all consumers, just without the new large loads. And so TEBA was the first organization to proactively propose when this regulatory proceeding opened last September that large loads should pay transmission charges according to their approved capacity. So essentially minimum contract demand charges. And so this idea has gained some traction. We’re sort of midway through a study trying to answer the question of how should you set those charges and for how long. What I can say is that initial results suggest that. a minimum demand charge sort of in the 85% of contracted demand is where you hold other customers harmless, meaning it’s rate neutral. You make it higher, you could reduce rates for other customers, but you would not want to set it too high and not at 100%, because you still want to incentivize some of that demand response benefit that you get from having a CP component. But the overall takeaway is that not only can growing demand take up the slack in terms of paying for system upgrades, we want them to.
Matt Boms: Yeah. Now for the sleeper story of that June second board meeting, everyone covered batch zero and that was the big story of the day, but almost nobody covered the other thing that ERCOT approved that day, which is something that we’re both very excited about, the new energy attribute certificate program. Can you tell us a little bit more and where did this program come from?
Bryn Baker: Sure. As you said, I’m actually quite excited about something that is as technical and mundane sounding as an EAC or energy attribute certificate. Because about a year and a half ago, we proposed to ERCOT to create this broader energy tracking system for the state’s electricity generation resources. And so EACs fundamentally are about creating greater transparency and credibility for buyer-driven transactions. And that’s what we need more of. They also create a revenue stream that can help bring new buyer-driven energy generation onto the system. And ERCOTS board just approved this program on June 2nd. The new EAC system provides essentially more granular accounting than other registries, including the existing one, which exists for renewable electricity certificates or RECs in the state. And that fundamentally unlocks opportunities for both large and small energy customers to invest in. Innovative energy resources and market products, which means it provides a mechanism to unleash all of this growth in advanced energy technologies, pulling those things like nuclear, demand flexibility, carbon capture and other low carbon gas, higher impact battery storage, a variety of other solutions, and pulling those things into the market because you have a way to track and credit and claim those transactions.
Matt Boms: Okay, I wanna make sure nobody’s lost because you’ve said certificate a few times now and I know some folks are picturing a diploma, but back up to the basics for me. What exactly is an energy attribute certificate and how does it actually work?
Bryn Baker: Yeah. So an EAC is essentially a tracking instrument that tells you when, where, how electricity was generated with the option to produce that information on an hourly basis. So think of it as a little bit like a digital banking system. So electricity goes into the system here and it gets taken out or consumed over here. You can’t track an electron, just like you don’t track a physical dollar in a banking system, but you know that dollar belongs to you. And so in today’s market, electricity can be tracked and claimed through these certificates. But the key limiter today is that RECs can only be issued to renewable generators. This is about creating a technology neutral system for any generator because buyers want to buy any type of generation. They want to buy all of it. And so a certificate being issued to that generation means that you have a way to track and claim and validate those transactions. Because especially as we’re building nascent markets and products for new technologies. Validation and trust in the market has to happen at the front end, not on the back end. And so what these EACs do is gives the market that kind of transparency that builds trust and credibility to do a whole bunch of things. So nuclear is a big priority for the state. Today, energy customers can’t claim that. And therefore they aren’t fully incented to buy it, but it also can carry that revenue stream, which allows the market to scale. The more you can build vibrant secondary markets for these products, because it’s a tradable instrument, the more you can grow the market. This is also true for things like energy storage or even carbon capture, where you need methodologies that tell you how to tabulate the full range of attributes. But a certificate is the way that you can do that and allow energy buyers to really claim and pull those technologies further into the market. It’s also just over the horizon that EACs could help enable demand flexibility.
Matt Boms: help pull that thread, how does a tracking certificate end up making a data center more flexible?
Bryn Baker: Well, you know, it starts with what are the cheapest, fastest ways to get new loads onto the system? And it’s how do we use the existing headroom? We know, for example, data centers are generally not inherently flexible. They can only flip to diesel backup so often. So how can they source flexibility elsewhere, including by sourcing megawatts from other perhaps distributed resources? And so we’re seeing constructs emerging for this elsewhere, but also here in Texas, where data centers but other loads essentially could pay for things like neighborhood energy systems, distributed battery and solar. That sounds like a win-win because neighborhoods get greater resilience, including to extreme weather, paid for by users that need that power. That’s a tangible benefit out of all this growth. Now, what the loads need to make all of that actually work is a capacity credit, which would come through the retail electricity provider, but the EAC. is the instrument that would track and validate the transaction and its attributes and benefits more transparently to the rest of the market. That’s a huge opportunity that we could take advantage of in trying to figure out how do you create the right incentives and market products to allow these large loads to buy flexibility and incent it across the whole system. That feels like the innovation edge.
Matt Boms: All right, bring us down to earth on the logistics. How did this program actually get built? And what has to happen before real certificates are being issued?
Bryn Baker: I mean, so first this was built through a multi-month process with 60 plus market stakeholders. It was modified quite a bit through the process. Following the ERCOT board approval, this now goes officially to the commission. Following the commission’s approval, ERCOT will go ahead and issue an RFP to select a third party vendor, because the construct here is that a third party administrator will build and run this new system. So the RFP will select that vendor through a process throughout the fall. And I think the ERCOT board would expect to approve whoever that vendor is no earlier than December of this year, which then would kick off sort of the building of the new system and starting to run it and issue certificates into next year.
Matt Boms: Wow, December of this year, that’s extremely fast. But the registries already exist. So what’s actually novel about this one?
Bryn Baker: Well, I think what’s novel about this is there are energy attribute certificates that are starting to be created in other voluntary registries, but not in as comprehensive a form as this is. And they’re independent. So what’s unique about this is that the data down to the watt hour is coming from ERCOT. It is being run through a third party, but it’s a more integrated system and it’s a more comprehensive system. And there are folks who look at this and say, This is the building block to where we ultimately really need to get to, which is an all-generation tracking system. And so over time, I think the hope is that the registries will consolidate and this will sort of become the gold standard for how do you do energy resource tracking across all generation resources in the most comprehensive way in the country.
Matt Boms: Wow, the gold standard for tracking every megawatt hour in the biggest competitive energy market in the country, built here first. I want to take a step back, Bryn, because we’ve covered a lot of ground today. Batch process that’s brand new and already oversubscribed, transmission fights, cost allocation fights, qualification rules with real open questions still hanging. And it would be easy to hear all of that and conclude that Texas is overwhelmed. But that’s not the read I get from you. You’ve been in these rooms in the stakeholder meetings, the board meetings, the commission workshops. So when you step back from all the technical detail and look at where this is headed, what feels most hopeful to you? What makes you optimistic about where Texas ultimately lands?
Bryn Baker: I think what feels most optimistic is that we didn’t get stuck in a cycle of analysis paralysis. I mean these numbers are huge. It’s daunting. But if anything, stakeholders and even the commission had to say, let’s take a couple more months to have a stakeholder process to develop, for example, the batch process. I think that points though to the fact that things are moving. Maybe not everyone’s happy, but things are moving. And so if we keep that sort of can do spirit pro innovation, pro-business approach. It means that we’ve got a lot of the ingredients to rapidly redesign some of these core planning processes. That is not a small undertaking, but that’s a door that we both need and want to walk through. And it seems like there is good momentum across the entire Texas community to say we have a huge opportunity to figure this out and get it right. It’s sort of a lone star-sized opportunity to prove that Texas has all the ingredients and the formula to. not just maintain that economic leadership that has sort of defined the Texas miracle, but taking it to a whole new level that a lot of other regions in the country can take advantage of and learn from. There’s probably 49 other states that would love to be in Texas position right now.
Matt Boms: All right, last big question, Bryn. And I want you to be honest with me because there’s the official version of how everyone feels about this in the press releases, in the board meeting thank yous. And then there’s what people actually say when the microphones are off. You talk to the buyers, the developers, the companies posting security deposits and waiting on the results of these studies. Some of them just found out that the rules that they’ll live under for years got written in a matter of months. So How would you describe the actual mood in this market right now? Is there a real acceptance of where things landed, a sense that the framework is workable and everyone refines it from here? Or is there still a lot of uncertainty sitting underneath the surface?
Bryn Baker: I think it’s probably still a bit mixed in the sense that people are still trying to parse really what are the implications of some of these rules. But I think the most important thing is that the building blocks are there. We have a construct to work within. And so there’s acceptance that we’re figuring this out. And a lot of it’s just about clarification and refining those rules as we go along. The tell is, I think, more how this plays out over the next couple of years, which is really critical. Are we actually building out the significant transmission that we need as the backbone of the grid? Are we taking advantage of the whole suite of solutions and building a much more integrated system where you’re integrating that demand and supply side in a flexible way that takes advantage of all of these things that can create, you know, the future grid that’s utilizing the full suite of solutions? And that we haven’t maybe unintentionally engineered our way out of a competitive energy market. That is still the bedrock of Texas success. And so making sure that near term pressures and emergencies make sure that we’re not just trying to preserve the way we’ve always done it. This is the time for innovation, expansion, and growth.
Matt Boms: Yeah, that’s what you hear the most from these companies is their number one preference is to connect to the grid because that’s the cheapest electron available. But if they have to, they’ll build the backup gen that they need to keep their operations running. So you’re completely right. And I think what’s the worst possible scenario for the ratepayer would be to build a parallel grid where all these large loads are running behind the meter, right? Like that’s not good for anyone. But I think, you know, only time will tell if we’re able to build out the grid that’s needed over the next few years.
Bryn Baker: Yeah, can we align these incentives up though? Because there’s no question that going behind the meter is a very expensive proposition for the large loads. But is the opportunity cost actually greater for the rest of us in not having a way of building an integrated system where they’re also paying their their fair share fully and getting the full grid interconnection that they want?
Matt Boms: Exactly. That’s the bonus content. Yeah.
Bryn Baker: But I think, you know, like that behind the meter dynamic is concerning right now because I don’t know that folks would say, We’re definitely gonna go figure out a way to island, but the longer that that becomes their only path, the more they’re gonna get pretty good at it. And then for you and me, like that locks in a lot of infrastructure. Potentially for the long haul.
Matt Boms: Bryn, moving forward, how do you see the role of renewables and batteries on the market? Are they gonna keep driving costs down for consumers? Or how do you see the next five to ten years playing out for solar, wind, and batteries in Texas?
Bryn Baker: I think the good thing is that year over year, grid performance is showing just how crucial this whole diversity, the whole array of technologies is to not just reliability, but keeping costs down. And that particularly highlights the role of renewable energy and storage and the growing value that they have, not just in setting capacity and generation records. Batteries have clearly been crucial to a number of grid reliability and weather events, but it really comes down to cost, this question of how are we going to meet the moment of building out a diverse array of resources and keep costs low. There’s already a good amount of research out there, including, you know, the report from Aurora from a year ago that found that restricting renewables could raise power bills 10%, renewables and storage reduce wholesale costs by about a billion per month. We did our own study that found if you cut some of these resources off, wholesale power costs rise by $15 billion over the next 15 years. The Dallas Fed, interestingly, presented at the ERCOT board meeting recently and highlighted the fact that power prices are rising a lot slower in Texas compared to other big data center markets. And a huge piece of that is that Texas is benefiting from this array of low-cost resources that are keeping costs down. And so what that amounts to is that Texas competitiveness and affordability really depends on keeping the market open to all of these resources.
Matt Boms: How do we start planning our transmission and distribution differently moving forward in ERCOT? Right? Because historically, the way that we build out transmission here is through reliability lines, but we have built only one or two economic planning lines ever, right, in ERCOT. So do you have any solutions for fixing that moving forward?
Bryn Baker: We do. We think that revisiting this idea of an economic planning framework is a really important way to open the aperture. Basing transmission around reliability violations is the bedrock, but it’s missing opportunities to consider a broader array of factors that would help us identify the most cost efficient transmission projects so that we are and consumers ultimately are assured that we are. Fully justified in these additional transmission costs because we’ve looked at all the alternatives, we’ve weighed multi value benefits. And ideally, looking out over a longer period of time. The way that we do transmission planning today is you take those future benefits and sort of collapse it down into one to three year horizon of benefits, but these are multi decadal projects. So first and foremost, a big part of doing more comprehensive transmission planning is looking out over a longer horizon of benefits. So that’s sort of a cornerstone to a broader economic planning framework that says reliability is a piece of a framework. And it also gives transmission entities an incentive to actually look at the economic implications to customers. And that’s frankly one of the reasons why we’re not fully evaluating advanced transmission technologies. So things like, software solutions on the grid enhancing technology side to advanced conductors. And that whole basket of things in it, the advanced transmission technology bucket, is clearly in the vein of what are our tools that are the cheapest, fastest things that we could deploy to expand transmission capacity in the next, say, five years, while we’re also building these much longer-lived multi-value transmission assets like the 765 lines.
Matt Boms: Bryn, this was great. Thanks so much for walking through all of this with me. And thanks so much for being on the podcast today.
Bryn Baker: Thank you for having me.
Matt Boms: Thanks for listening to the Energy Capital Podcast. If today’s conversation helped you make sense of the energy world, share the episode with a friend and hit follow on your podcast app. You can find us on Apple Podcasts, Spotify, and all the usual platforms. For deeper analysis each week, subscribe to the Texas Energy & Power newsletter at TexasEnergyAndPower.com. That’s where you’ll find every episode, every article, and all of our latest updates. We’re also on LinkedIn. X and YouTube, where we post clips, insights, and ongoing commentary. Big thanks to Nate Peavey, our producer. I’m Matt Boms and I’ll see you next time. Stay curious, stay engaged, and let’s keep building a stronger, smarter, energy future.
