--- title: Texas Capacity Withdrawals Signal Growing Reliability and Price Risk for ERCOT Buyers description: Texas Capacity Withdrawals Signal Growing Reliability and Price Risk for ERCOT Buyers image: https://assets.simpleviewinc.com/simpleview/image/upload/c_fill,h_340,q_75,w_545/v1/crm/austin/Texas-State-Capitol-South-Facade-2015.-Courtesy-of-the-Texas-State-Preservation-Board.-FOR-ACVB-USE-ONLY.2-deab0033c10caad_deab01b1-a18b-29bc-401f131d372cbabc.jpg --- [![logo_full-color](https://stanwichenergy.com/hubfs/Website%20Assets%20-%202023/logos_NEW_updated_01-31/logo_full-color.svg "logo_full-color")](http://StanwichEnergy.com) [![logo_white](https://stanwichenergy.com/hubfs/Website%20Assets%20-%202023/logos_NEW_updated_01-31/logo_white.svg "logo_white")](http://StanwichEnergy.com) - [Services](https://stanwichenergy.com/services) - [Energy Procurement](https://stanwichenergy.com/services/energy-procurement) - [Sustainability](https://stanwichenergy.com/services/sustainability) - [Risk Management](https://stanwichenergy.com/services/risk-management) - [Demand Response](https://stanwichenergy.com/services/demand-response) - [Reporting](https://stanwichenergy.com/services/reporting) - [Energy Efficiency](https://stanwichenergy.com/services/energy-efficiency) - [About](https://stanwichenergy.com/about) - [Insights](https://stanwichenergy.com/insights) - [Energy Procurement](https://stanwichenergy.com/insights?topic=energy-procurement) - [Sustainability](https://stanwichenergy.com/insights?topic=sustainability) - [Markets](https://stanwichenergy.com/insights?topic=markets) [Contact Us](https://stanwichenergy.com/contact-us) [Log In](https://stanwichapp.com/home) [Contact Us](https://stanwichenergy.com/contact-us) [Log In](https://stanwichapp.com/home) ![](https://stanwichenergy.com/hubfs/Screenshot%202023-11-01%20130151-2.png) # Texas Capacity Withdrawals Signal Growing Reliability and Price Risk for ERCOT Buyers Sign Up for Blog Updates ## Explore Other Resources [All Resources](https://stanwichenergy.com/insights) [Energy Procurement](https://stanwichenergy.com/insights?topic=energy-procurement) [Sustainability](https://stanwichenergy.com/insights?topic=sustainability) [Markets](https://stanwichenergy.com/insights?topic=markets) ![Close](https://stanwichenergy.com/hubfs/raw_assets/public/images/stanwich-plus-button.svg) ## Subscribe Today! ## Texas Capacity Withdrawals Signal Growing Reliability and Price Risk for ERCOT Buyers April 04, 2025 | [Bob Johnson](https://stanwichenergy.com/insights/author/bob-johnson) Over the past several weeks, nearly 3,500 MW of planned natural gas generation — about 40% of the capacity originally proposed — has been canceled or withdrawn from the Texas Energy Fund (TEF). These projects were intended to help shore up ERCOT’s increasingly strained grid as electricity demand continues to surge, fueled by data centers, industrial expansion, and Texas’s broader economic growth. The reasons behind these withdrawals are telling: developers face rising construction costs, uncertainty around future market incentives, and a lack of confidence in the TEF's structure. Compounding the issue, the Texas Legislature is actively considering legislation — SB 388 and SB 819 — that would restrict the development of utility-scale renewables, battery storage, and distributed energy resources, further limiting the grid’s options to meet soaring demand. ![Listing Image](https://assets.simpleviewinc.com/simpleview/image/upload/c_fill,h_340,q_75,w_545/v1/crm/austin/Texas-State-Capitol-South-Facade-2015.-Courtesy-of-the-Texas-State-Preservation-Board.-FOR-ACVB-USE-ONLY.2-deab0033c10caad_deab01b1-a18b-29bc-401f131d372cbabc.jpg) Source: Austintexas.org **Why It Matters** ERCOT's 2025-2027 Capacity, Demand, and Reserves (CDR) Report had already projected tight reserve margins, even before accounting for these gas project withdrawals or the potential slowdown of renewable development. Now, the situation is more concerning. Without new gas plants, and with renewables and storage facing policy headwinds, the market is left with fewer tools to meet projected load growth over the next several years. For electricity buyers, this raises the risk of: - Elevated and more volatile forward prices as the market begins to factor in supply constraints. - Increased scarcity pricing during peak demand intervals, especially during Texas summers. - Greater reliability concerns, including the heightened potential for rolling outages if extreme weather coincides with limited capacity. **Could Texas Fill the Gap Another Way?** In theory, yes — but there is no quick or easy fix. Texas could: - Allocate state funds directly to generation through legislative appropriations. - Enhance ERCOT’s market design, such as implementing a Performance Credit Mechanism (PCM) or other capacity-style incentives. - Establish state-backed loan guarantees to lower financing costs. - Leverage economic development funds to prioritize dispatchable generation. However, even if one or more of these measures materialize, the fundamental issue is that developers want long-term revenue certainty, not just upfront capital support. Without confidence in the regulatory and market framework, new gas development will likely remain stalled. **The Outlook for Buyers** The takeaway is straightforward — ERCOT is entering a period where supply growth is slowing, but demand is not. Natural gas projects are pulling back, renewable growth could be restricted, and storage may not scale fast enough to bridge the gap. For buyers, this translates into a higher likelihood of price volatility, elevated forward curves, and increased reliability risk over the next several years. This is a significant development for energy buyers to monitor, especially as forward market opportunities may temporarily soften, but the structural imbalance is likely to put sustained upward pressure on prices. For additional information please [contact us](https://stanwichenergy.com/contact-us) to schedule a quick call. 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