Texas’ energy demand may exceed supply in 2026, but experts caution against panic

“Texas’ energy demand may exceed supply in 2026, but experts caution against panic” was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

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Texas’ main grid operator on Thursday forecast that the state’s growing demand for power could surpass its available energy supply beginning in summer 2026.

In a report outlining potential supply and demand over the next five years, the Electric Reliability Council of Texas said it’s possible that the grid would not have enough power to meet peak demand during the summer and winter seasons starting next year.

But that was the most dire of the scenarios that ERCOT outlined. Others show that supply would be tight but stay just ahead of demand. And some experts cautioned that the assumptions ERCOT used were flawed and more pessimistic than what’s likely to happen.

The parameters in the report “better represent the performance of grid resources and the dynamic nature of the ERCOT grid,” ERCOT said in releasing the report. “But it’s important to note that all scenarios in this report have a certain level of uncertainty that can alter the long-term resource adequacy outcomes, and these forecasts will change over time based on a variety of factors.”

ERCOT estimates that demand for power will nearly double by 2030, largely due to population growth, more extreme weather and the increase of large users such as crypto mines, data centers and electrifying oil and gas operations.

The grid operator sharply increased its prediction for how much power demand will grow in the coming years after the state Legislature passed a law in 2023 changing how ERCOT forecasts demand.

Previously, ERCOT could only count power users that had signed connection agreements with a utility. The new law allowed ERCOT to include potential power users without a signed agreement, if the utility considered the project likely to plug into the grid.

But judging whether large users will actually build in Texas is difficult, experts said, as companies can submit duplicate requests to connect their projects in different places. This legislative session, lawmakers are expected to instruct regulators to firm up their demand forecast by requesting more information from projects looking to plug in Texas’ grid.

ERCOT’s most dire prediction on Thursday said that energy supply would fall 6.2% short of peak summer demand in 2026. The gap would continue to widen to 32.4% by summer 2029, with winter seasons seeing slightly smaller shortages over the same time span.

ERCOT also modeled alternative scenarios reflecting slower demand growth and a faster build out of new generation, including 9,720 megawatts from projects funded by the Texas Energy Fund — a $10 billion taxpayer-funded loan program meant to incentivize the development of new natural-gas powered plants.

Under those scenarios, ERCOT largely maintained enough supply to meet demand. But the model assumed that the Texas Energy Fund projects would not experience any delays, unlike typical projects.

ERCOT CEO Pablo Vegas said the state’s economic growth shows that “action is needed today to ensure long-term reliability and affordability.”

Some experts argued that the report was based on an assumption of massive demand growth they said was unlikely to happen.

“The numbers look that bad because of the assumption of 52 GW of new load coming online in four years,” Joshua Rhodes, a research scientist at the University of Texas at Austin, said in a message. “I just don’t believe that that much new load can come online that fast, so I don’t think things are as bad as the report would indicate.”

Doug Lewin, an energy consultant, called ERCOT’s assumptions “irredeemably flawed,” and “needlessly panic inducing.”

Michael Jewell, an energy attorney and expert, noted that the report represented a snapshot that did not capture how large energy users respond to high energy prices by lowering usage. He added that ERCOT’s estimates undervalued the state’s growing solar and wind energy resources.

“When you essentially push down on the amount of generation and push up on the amount of load, it’s going to show a deficiency of generation to meet the demand,” Jewell said.

Texas increased its power supply by 35% over the last four years, Gov. Greg Abbott said in his State of the State address this month. More than 90% of that came from solar, wind and batteries, according to Lewin.

Experts emphasized the need to continue developing all types of energy resources in Texas, alluding to a number of bills proposed in the Legislature that could make it harder to expand solar and wind power.

“We’re going to need every megawatt that we can get, from every generation resource that we can get,” Jewell said. “Legislative proposals that would discourage the continued development of every resource — that’s anti-energy.”

ERCOT said that it would continue to work on solutions to bolster its supply margins, by enhancing battery storage, working with large energy users that can quickly reduce their usage during tight grid conditions and supporting Texas Energy Fund projects, among other measures.

“ERCOT looks forward to working on short- and long-term solutions with the Texas Legislature, [the state Public Utility Commission] and stakeholders to continue to strengthen the reliability and resiliency of the Texas power grid,” Vegas said.

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This article originally appeared in The Texas Tribune at https://www.texastribune.org/2025/02/13/texas-power-grid-ercot-energy-forecast/.

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