Last year, ERCOT stunned observers when it projected that electricity demand in Texas could double within five years. That announcement kicked off a wave of meetings, legislative hearings, and proposals. But now?

ERCOT’s latest projections say we might need to triple our electric supply.

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The driver? A massive wave of industrial electrification and data centers, including artificial intelligence and crypto operations.

This is unprecedented growth. And with it comes an urgent question:

Can the ERCOT market keep up, or will policymakers get in the way?

“I DO think the market structure today is very well suited…”

That was ERCOT CEO Pablo Vegas testifying before the Texas House State Affairs Committee on April 9.

In response to a question from Rep. Rafael Anchía about whether the market can meet rising demand without heavy government involvement, Vegas was clear:

“I do. I think the market structure today is very well suited to support the growth trajectories that we're seeing...”

Vegas emphasized that Texas’ light regulatory touch allows capital to flow, deals to be made, and new generation to come online quickly.

But at the very same time, lawmakers are advancing bills that directly undermine that market structure, including SB 819, SB 715, HB 3356, and SB 388.

These bills would make it harder for new energy generation to come online, just when we need it the most.

We need every electron

Rep. Anchía put it bluntly:

“It sounds like we're going to need every electron… from new generation, from conservation or energy efficiency... We need all of it.”

Vegas agreed. Yet the legislation moving through the Capitol would limit the very resources that are fastest and cheapest to deploy.

Natural gas, for instance, takes years to bring online. Vegas estimated that even under the best conditions, new thermal generation won’t show up until 2029 or 2030.

Meanwhile, ERCOT’s mid-range forecast calls for 44 gigawatts of new demand in that same timeframe.

If 10 gigawatts of gas shows up by 2030 — an optimistic outlook — where’s the other 34 gigawatts coming from? If you don’t have enough power, your economy can not grow.

The answer is already in the market

Vegas pointed to a real solution—bilateral contracts between data centers and power developers:

“They have the money… they want speed to market… it makes sense that we would see supply develop through that too.”

This is market design 101. Buyers and sellers can find each other, strike deals, and build what they need—without governmental interventions into the market and costly mandates.

Companies like Meta, Google, Amazon, and OpenAI, and many more, are ready to pay their own way. And if they can be flexible, we can accommodate a whole lot more demand.

The solution is baked into the problem.

Let the market do what it’s built to do.

Do Texas lawmakers still trust markets?

This is the core question.

If we really believe in competition, then we must resist the urge to rewrite market rules just because some outcomes are inconvenient. In fact, many of the state’s largest generators and industry groups oppose further changes to ERCOT’s structure this session.

The more policymakers try to force outcomes, the more they’ll delay them.

We’re in a pivotal moment. The ERCOT CEO, the industry, and basic economic logic all point to a clear path: let the market respond to rising demand.

That doesn’t mean doing nothing. It means:

* Preserving a stable and predictable market environment

* Supporting all-of-the-above resource development

* Investing in efficiency, transmission, and demand-side solutions to free up headroom on the grid

It also mean rejecting bills that slow progress, raise costs, and create massive regulatory uncertainty.

Show Notes:

ERCOT Load Growth & Forecasts

* ERCOT Presentation to the Board of Directors (also presented to House Committee on State Affairs) - this was the presentation Chairman Anchia and ERCOT CEO were looking at as they talked.

* ERCOT 2025 Long-Term Load Forecast Report - Details projections of electricity demand growth, highlighting the impact of data centers and industrial electrification.

* ERCOT Load Forecast Overview - Provides access to ERCOT's long-term and mid-term load forecasts, including methodology and historical data.

Bills Impacting the ERCOT Market

* Senate Bill 819 (SB 819) - Requires wind and solar projects to undergo burdensome new permitting and siting restrictions. This bill would stifle economic growth in rural Texas, where renewables are a key driver of tax revenue and jobs. More on that bill here and here.

* Senate Bill 715 (same as House Bill 3356) - Would require generators to procure their own firming capacity, forcing inefficient redundancies and discouraging investment.This bill undermines ERCOT’s competitive market design and adds massive costs to consumers of all kinds.

* Senate Bill 388 (SB 388) - Mandates that 50% of new capacity be “dispatchable,” but excludes battery storage. This bill could raise energy costs and mean the economy could grow only as fast as gas turbines are available.

Legislative Hearings

* Texas House State Affairs Committee – April 9, 2025 Hearing - Access video recording of the committee hearing where ERCOT CEO Pablo Vegas testified on market readiness. He starts right at about 1:00:00, or one hour in.

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Does the Texas Legislature Still Believe in Market Competition?

Energy Capital Podcast (private feed for [email protected])

Does the Texas Legislature Still Believe in Market Competition?