While ERCOT is the only major US power market without capacity payments, it is a model found elsewhere, including in Australia's National Electricity Market. A government review there late last year reached a conclusion similar to that of Senate Bill 6: that the way to get new plants built is to underwrite them with long-term contracts. 12 AI data centres are rewriting the load curve and deal structure The demand side is also evolving. AI-driven data centres, like conventional cloud-based facilities, require extremely high levels of reliability. But a single AI site can demand hundreds of megawatts, while also introducing much sharper swings in load demand. Those fluctuations are difficult for the grid to absorb, calling for more responsive generation, storage and control systems. AI is set to drive rapid growth in data centre power demand, forcing developers to rethink how these loads are served. 13 On the one hand, many data-centre operators remain committed to clean energy and continue to prioritise renewables. On the other, even a mixture of battery storage, wind and solar struggles to sustain continuous operation under fast-changing loads. That forces reliability and sustainability to pull against each other. One emerging response is the integrated energy system: wind and solar supply most of the energy, while storage and dispatchable gas provide flexible, on-demand capacity to manage variability and maintain reliability. Behind-the-meter configurations allow these systems to serve large; high-reliability loads directly while reducing exposure to grid constraints. This approach is already visible in Texas, where Alphabet is developing energy parks through data centre energy group Intersect that combine renewables, storage and gas generation to support data centre growth. 14 How developers engineer certainty when the market won’t
Behind-the-meter may be more dependable than the alternatives, but it alone can't deliver the near- perfect reliability data centre demand. That level of dependability takes careful system design that builds in backup generation, redundancy and battery storage. Those measures have the added benefit of reassuring lenders.
Developers have to build certainty
Despite recent policy changes, ERCOT still doesn't pay for capacity, so developers must engineer stability through contracts rather than rely on the market alone. In practice, this is driving projects toward configurations built around large, anchored loads, often behind the meter or in close proximity to a single customer. These structures align generation with demand and provide the predictable cash flows that lenders require. Gas remains a reliable bridge alongside renewables, but reliability alone isn't enough. In an energy-only market, a plant’s bankability depends on how revenue is structured, not just how power is produced. When those elements come together, secured demand, stable contracts and resilient system design, gas-to-power projects stop being a bet on price spikes and become investable infrastructure that can support both reliability and the energy transition.
References
1. Wall Street Journal. "Winter Storm Forces Rolling Power Outages in Texas." February 15, 2021. https://www.wsj.com/us-news/climate-environment/winter-storm-forces- rolling-power-outages-in-texas-11613407767. 2. U.S. Energy Information Administration. "ERCOT increasingly meets rising demand with solar, wind, and batteries." October 24, 2025. https://www.eia.gov/todayinenergy/detail.php?id=66464. 3. Wall Street Journal. "Texas Electric Bills Were $28 Billion Higher Under Deregulation." February 24, 2021. https://www.wsj.com/business/energy-oil/texas-electric-bills- were-28-billion-higher-under-deregulation-11614162780. 4. Federal Energy Regulatory Commission, North American Electric Reliability Corporation. "The February 2021 Cold Weather Outages in Texas and the South Central United States: FERC, NERC and Regional Entity Staff Report." November 16, 2021. https://www.ferc.gov/media/february-2021-cold-weather-outages-texas- and-south-central-united-states-ferc-nerc-and 5. Reuters. "Texas Off-Grid Power Build Soars as Data Centers Bridge Grid Delays." May 6, 2026. https://www.reuters.com/business/energy/texas-off-grid-power- build-soars-data-centers-bridge-grid-delays--reeii-2026-05-06/. 6. Texas Public Policy Foundation. "New Report: Texas Transmission Costs Expected to More Than Double, Adding $100 Annually to Average Electric Bills." January 12, 2026. https://www.texaspolicy.com/press/new-report-texas-transmission-costs- expected-to-more-than-double-adding-100-annually-to-average-electric-bills. 7. International Energy Agency. World Energy Investment 2026. May 28, 2026. https://www.iea.org/reports/world-energy-investment-2026.
8. Federal Energy Regulatory Commission. "An Introductory Guide to Electricity Markets Regulated by the Federal Energy Regulatory Commission." n.d. https://www.ferc.gov/introductory-guide-electricity-markets-regulated-federal- energy-regulatory-commission. 9. Modarresi, Hassan. Gas-to-Power Policy and Market Design Pathways: Impact of Policy and Market Design Pathways on Gas-to-Power Project Economics — An Analysis of ERCOT and PJM Markets for Data Center Load Growth. Rice Business, Jones Graduate School of Business. April 19, 2026. 10. Utility Dive. "Data Center Demand Spike Could Drive 79% ERCOT Price Hike in 2027: EIA." March 16, 2026. https://www.utilitydive.com/news/data-center-demand- spike-could-drive-79-ercot-price-hike-in-2027-eia/814804/. 11. Texas Legislature. "SB 6, 89th Regular Session." June 20, 2025. https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=SB6. 12. Australian Government, Department of Climate Change, Energy, the Environment and Water. "National Electricity Market Wholesale Market Settings Review: Final Report." December 2025. https://www.energy.gov.au/sites/default/files/2025-12/ national-electricity-market-wholesale-market-settings-review-final-report.pdf. 13. Modarresi, Hassan. Gas-to-Power Policy and Market Design Pathways: Impact of Policy and Market Design Pathways on Gas-to-Power Project Economics — An Analysis of ERCOT and PJM Markets for Data Center Load Growth. Rice Business, Jones Graduate School of Business. April 19, 2026. 14. Financial Times. "Alphabet Agrees to Buy Intersect for $4.75bn." December 22, 2025. https://www.ft.com/content/1fefa00c-408f-4b46-a54e-44b95fc21630.
Wind + solar Supplying most energy.
Battery storage + dispatchable gas Providing flexible on-demand capacity.
AI data centre Demanding hundreds of MW with back up generation and redundancy layered in.
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