Today is Friday the 13th. An unlucky day just before the Asian New Year during which you wish everyone you meet good luck and future prosperity. The month of February is full of interesting dates. For example, tomorrow will be Valentine’s Day – a sort of giving and sharing theme. I will be giving, no doubt. It’s also Black History month, marking a saga of American history that grows in meaning and importance with each passing year. What did I leave out? Oh, yes, President’s Day, which signifies durable-goods sales and a long weekend to goof off. That provides more couch time to watch the Winter Olympics. I resist peeking into the games for as long as possible because I can’t let go once I start. I have to see who wins the figure skating pairs and singles; I have to know the best giant slalom skier, and then there’s ski jumping, curling, biathlon, luge, and ice hockey. I hate the way the Olympics become a time sink.
Speaking of sporting events, the Super Bowl came and went with the odds-on favorite team holding the trophy. The game was okay and a good excuse to munch on Trader Joe’s Movie Theater popcorn, but at the same time it lacked sizzle. The first three quarters were a stalemate between two superb defenses. The Patriots’ D eventually gave way to solid play from an experienced QB and shifty running back for Seattle, and the New England offense imploded with shaky play from their QB. Before the opening kickoff, I doubted that Drake Maye could rise to the occasion, and ultimately he didn’t. But there’s always a chance a hero will show up for the big game a la Joe Montana, Tom Brady, or Aaron Rodgers just to name a few.
The Queue Crunch
Jefferies wrote in its report: “The large-load queue roughly tripled over 2025 …. That volume forced a redesign from serial studies to a batch/cluster study framework … Because this transition is occurring in parallel with [the] SB6-driven PUCT rulemaking on large load interconnection standards, the process reset is not a shock, but it reinforces that the data center interconnection and contracting path remains messy through at least 2H26.” The plan phases in interconnection-point deliverability over five years. However, the ramp is not necessarily linear. Full deliverability is assured in year six after the initial MW ration. That makes the process a bit complicated and troublesome for power-plant developers. Load may be able to smooth its demand growth, but I don’t see how that can easily work for generation.
The Jeffries Equity team concluded that, “because reliability and resiliency spend can often backfill near-term slippage while the long-term customer-driven opportunity is preserved … For IPPs, the exposure is more acute: staged allocations dampen the near-term scarcity thesis, contracting cadence can slip as counterparties wait for interconnection clarity, and the process is explicitly designed to prune speculative demand.” Sounds good, but the proposal attracted a lot of negative outcries from market participants across the board.
Thus, at its February 6th open meeting, Texas PUC (PUCT) commissioners rejected ERCOT’s implementation plan. The PUCT’s Chair extended the deadline for evaluating the proposal from February to June thereby allowing time for stakeholders to engage with ERCOT on the details. Per Jefferies, “The unanimous view was that rushing to launch without adequate stakeholder vetting risked creating a flawed process.”
The first workshop “drew 170+ in-person and 600+ virtually with 100+ questions. The four most debated topics were batch entry cutoff dates, energization realism, co-located generation rules, and alignment with existing transmission planning processes.” Wow. Maybe the CAISO is fortunate to avoid the landslide of new datacenter projects that are speculating in Texas. It would be a small miracle if all parties at ERCOT could reach a settlement by June. Me thinks it is unlikely.
A Different Home BESS Strategy in Texas
Speaking of Texas and things griddy, according to an article in the WSJ, a new company in Texas co-founded by the son of Dell’s originator, 29-year old Zach Dell, might be biting off more than he can chew. The company is called Base Power, a home-battery company that claims to have 10,000 customers and adding over 50 a day in Austin, Dallas-Fort Worth and Houston. Base Power describes itself as a subscription service. The company owns the batteries and is a retail service provider for electricity offering an attractive energy rate.
If the lights go out, the batteries will power the customer’s home for a limited time depending on the number of units installed.
Base Power performs several functions simultaneously. First, as a residential retail energy service provider, the company supplies all the electricity needs of a home. It offers a below-market rate as an incentive. It also installs either one or two battery storage units at the customer’s property, for which the customer pays a one-time fee ($695 or $995, respectively) and a monthly fee ($19 or $29 per month, respectively). What I haven’t yet figured is how Base Power’s central control either discharges or charges these scattered residential batteries. I assume the company bids to either buy or sell energy in ERCOT and either shoves in more energy at the customers’ locations (charging) or siphons off energy from the home (discharging). There must be some way to assure the Base Power customer that the amount withdrawn doesn’t exceed the energy content stored in the on-site battery. In effect, Base Power is a virtual power plant with the added complexity of monitoring and controlling the state of charge across many thousands of interconnection points on the distribution system.
Are Base Power’s customers happy with the arrangement? Mostly yes, however there is a thread of complaints on social media platforms about the long-term contract customers must sign and the monthly fees. Regarding customer service, installation, and front office support, there is widespread approval.
Not wishing to be a Debby Downer, I find the business plan fraught with many risks. The greatest one is monitoring the state of charge for the fleet. Either the household is served fully (or is it partially?) with battery-charged energy or not. It’s not like a dimmer switch for a light fixture. Exactly how does Base Power determine the hourly energy discharge given that household demand can fluctuate within the hour or then 5-minute real-time horizon? The second risk is the safety switches that protect the distribution lines and linemen in case of a local outage and the performance of routine maintenance. Third, the losses in round-trip efficiency from injection to withdrawal would seem very sizable, although I don’t have a factor in mind. And finally, the required performance of the battery if the customer loses local utility service can’t be very long. Days? Hours? What then?
So, dig on this. While Base Power is plugging into the grid one household at a time, the Equity Research folks at Jefferies report that investment in battery energy storage systems (BESS) is ebbing in ERCOT. To wit, “Despite the acceleration in 2025, Modo Energy reported a 50% decline in new battery applications in ERCOT’s interconnection queue. The 6GW of added capacity in 2025 reflects connection applications that were filed as early as 2020, back when ERCOT merchant revenues were stronger … Merchant revenues fell from $192/kw ($16/kw-mo) in 2023 to an average of $43/kw ($3.58/kw-mo) between 2024/2025.” Well, I’ll be. There is a sky that limits BESS opportunities in Texas. Show me the money?
The equity research firm added: “Recent drop in interconnect requests in ERCOT is not surprising given lower merchant economics … we believe capacity payments are in the low- to mid-single digit range ($/kw-mo) and hence not enough on a standalone basis to clear developers’ return threshold.” It’s the economics, stupid.
Data Centers Zoning Out
Last week, I expressed my shock about the number of data center proposals that are being met with local and state opposition. The trend marches on. Talen Energy (TLN) owns and operates the 1,500 MW gas-fired Montour Generating Station in Montour County, PA. The County Zoning Board rejected TLN’s request to rezone farmland around the power plant from agricultural to industrial use for the development of a new Amazon Web Services datacenter. They found that TLN’s stated benefits of jobs, tax revenues, and economic development were presented only in broad, nonbinding terms. In short, local opposition quashed the proposal for now. However, Talen believes that with revisions the request can be acceptable. Time for Talen to buy the County some new toys like a new shiny red fire engine. Without such, the development will continue to stall because of complaints about spot zoning. In the Zoning Board’s evaluation, according to the coverage provided by Bank of America Securities (BofAS), there was, “unusually broad public and institutional opposition-including thousands of petition signatures, objections from school districts and municipalities, and a negative recommendation from the planning commission. While not determinative on its own, this opposition reinforced concerns about compatibility, long-term land-use impacts, and TLN’s limited early community engagement.” Would that be one new school building and public park, or two? Throw in a private jet or a new wastewater treatment plant for good measure. BofAS also reported that, “[Talen] management acknowledged the need for stronger early engagement with local stakeholders at Montour but also other sites being considered for similar developments.” You think? The land use debate also appeared in Virginia. In a news outlet called Canary Media, it was reported that, “Virginia is primed for utility-scale solar development. The state is the data center capital of the world, with a growing number of facilities needing more and more electricity. Large solar is one of the cheapest and quickest ways to satisfy that demand.” However, regulations on the books in two-thirds of the state’s counties prohibit utility-scale solar farms. Per the chirping Canary, “County resistance to solar has risen — spurred in part by solar developers that fail to control sediment runoff during construction and operation, contributing to pollution in the Chesapeake Bay and other waterways.” What’s a state primed to be the datacenter capital of the world to do?
It’s almost certain that the new Democratic Governor and state legislature will approve a bill that bans outright county blanket bans on new large-scale solar developments. There’s a reversal of fortune. “The legislation nearing Spanberger’s desk builds on an unsuccessful measure introduced two years ago … that would have simply outlawed blanket bans on solar, along with size and density restrictions, while retaining local authority over permitting.” The new bill would still prevent outright and de facto bans. But it would also establish, “a host of statewide standards for solar farms … Plus, it would require solar developers to pay for equipment removal and land restoration when a project is decommissioned.” The Californication of Virginia.