Texas energy experts look ahead to what's in store for oil and gas in 2025. Photo via Getty Images

If you tune in to the popular national narrative, 2025 will be the year the oil and gas industry receives a big, shiny gift in the form of the U.S. presidential election.

President Donald Trump’s vocal support for the industry throughout his campaign has casual observers betting on a blissful new era for oil and gas. Already there are plans to lift the pause on LNG export permits and remove tons of regulatory red tape; the nomination of Chris Wright, chief executive of Liberty Energy, to lead the Department of Energy; and the new administration’s reported wide-ranging energy plan to boost gas exports and drilling — the list goes on.

While the outlook is positive in many of these areas, the perception of a “drill, baby, drill” bonanza masks a much more complicated reality. Oil and gas operators are facing a growing number of challenges, including intense pressure to reduce costs and boost productivity, and uncertainty caused by geopolitical factors such as the ongoing conflicts in the Middle East and Russia-Ukraine.

From our vantage point working with many of the country’s biggest operators and suppliers, we’re seeing activity that will have major implications for the industry — including the many companies based in and operating around Texas — in the coming year. Let’s dig in.

1. The industry’s cost crunch will continue — and intensify.
In 2024, oil and gas company leaders reported that rising costs and pressure to cut costs were two of the top three challenges they faced, according to a national Workrise-Newton X study that surveyed decision makers from operators and suppliers of all sizes. Respondents reported being asked to find an astonishing 40% to 60% reduction in supply chain-related costs across categories, on average.

Given the seemingly endless stream of geopolitical uncertainty (an expanded war in the Middle East, continued conflict after Russia’s invasion of Ukraine, and China’s flailing economy, for starters), energy companies are between a rock and a hard place when it comes to achieving cost savings from suppliers.

With lower average oil prices expected in 2025, expect the cost crunch to continue. That’s because today’s operators have only two levers they can rely on to drive an increase in shareholder returns: reducing costs and increasing well productivity. Historically, the industry could rely on a third lever: an increase in oil demand, which, combined with limited ability to meet that demand with supply, led to steadily increasing oil prices over time. But that is no longer the case.

2. The consolidation trend in oil and gas will continue, but its shape will change.
In the wake of the great oil and gas M&A wave of 2024, the number of deals will decrease — but the number of dollars spent will not. Fewer, larger transactions will be the face of consolidation in the coming year. Expect newly merged entities to spin off non-core assets, which will create opportunities for private equity to return to the space.

This will be the year the oil and gas industry becomes investable again, with potential for multiple expansions across the entire value chain — both the E&P and the service side. From what we’re hearing in the industry, expect 2 times more startups in 2025 than there were this year.

With roughly the same amount of deals next year, but less volume and fewer total transactions, there will be more scale — more pressure from the top to push down service costs. This will lead to better service providers. But there will also be losers, and those are the service providers that cannot scale with their large clients.

3. Refilling SPR will become a national priority.
The outgoing administration pulled about 300 million barrels out of the country’s Strategic Petroleum Reserve (SPR) during the early stages of the Russia-Ukraine conflict. In the coming year, replenishing those stores will be crucial.

There will be a steady buyer — the U.S. government — and it will reload the SPR to 600-plus million barrels. The government will be opportunistic, targeting the lowest price while taking care not to create too much imbalance in the supply-demand curve. A priority of the new administration will be to ensure they don’t create demand shocks, driving up prices for consumers while absorbing temporary oversupply that may occur due to seasonality (i.e. reduced demand in spring and fall).

The nation’s SPR was created following the 1973 oil embargo so that the U.S. has a cushion when there’s a supply disruption. With the current conflict in the Middle East continuing to intensify, the lessons learned in 1973 will be top of mind.

If OPEC + moves from defending prices to defending market share, we can expect their temporary production cuts to come back on market over time, causing oversupply and a resulting dramatic drop in oil prices. The U.S. government could absorb the balance, defending U.S. exploration and production companies while defending our country's interest in energy security. Refilling the SPR could create a hedge, protecting the American worker from this oversupply scenario.

4. The environment and emissions will remain a priority, and the economic viability of carbon capture will take center stage.
Despite speculation to the contrary, there will be a continuation of conservation efforts and emissions reduction among the biggest operators. The industry is not going to say, “Things have changed in Washington, so we no longer care about the environment.”

But there will be a shift in focus from energy alternatives that have a high degree of difficulty and cost keeping pace with increasing energy demand (think solar and wind) to technologies that are adjacent to the oil and gas industry’s core competencies. This means the industry will go all in on carbon capture and storage (CCS) technologies, driven by both environmental concerns and operational benefits. This is already in motion with major players (EQT, Exxon, Chevron, Conoco and more) investing heavily in CCS capabilities.

As the world races to reach net-zero emissions by 2050, there will be a push for carbon capture to be economical and scalable — in part because of the need for CO2 for operations in the business. In the not-so-distant future, we believe some operators will be able to capture as much carbon as they're extracting from the earth.

5. The sharp rise in electricity demand to power AI data centers will rely heavily on natural gas.
Growth in technologies like generative AI and edge computing is expected to propel U.S. electricity demand to hit record highs in 2025 after staying flat for about two decades. This is a big national priority — President Trump has said we’ll need to more than double our electricity supply to lead the globe in artificial intelligence capabilities — and the urgent need for power will bring more investment in new natural gas infrastructure.

Natural gas is seen as a crucial “bridge fuel” in the energy transition. The U.S. became the world's top exporter of LNG in 2023 — and in the year ahead, brace for a huge push for pipeline infrastructure development in the range of 10-15 Bcf of new pipeline capacity in the next two to three years. (Translation: development on a massive scale, akin to railway construction during the Industrial Revolution.)

Big operators have already been working on deals to use natural gas and carbon capture to power the tech industry; given the significant increase in the electricity transmission capabilities needed to support fast-growing technologies, there will continue to be big opportunities behind the meter.

6. Regulatory processes will become more efficient, not less stringent.
This year will bring a focus on streamlining and aligning regulations, rather than on wholesale rollbacks. It’s not carte blanche for the industry to do whatever it wants, but rather a very aggressive challenge to the things that are holding operators back.

Historically, authorities have stacked regulation upon regulation and, as new problems arise, added even more regulations on top.There will be a very deliberate effort this year to challenge the regulations currently in place, to make sure they are aligned and not just stacked.

The new administration is signaling that it will be deliberate about regulation matching intent. They’ll examine whether or not particular policies are valuable to retain, or reconfigure, or realign with the industry to enable growth and also still protect the environment.

Easing the regulatory environment will enable growth in savings, lower project costs and speed to bring projects online. Another benefit of regulatory certainty: it will make large capital project financing more readily available. We’ve seen major gridlock in large project financing due to a lack of trust in the regulatory environment and potential for rules to change mid-project (see: Keystone XL). If they are certain the new administration will be supportive of projects that are viable and meet regulatory requirements, companies will once again be able to obtain the financing needed to accelerate development and commissioning of those projects.

But we shouldn’t mistake a new era of regulatory certainty for a regulatory free-for-all. Take LNG permits. They should be accelerated — but don’t expect a reduction in the actual level of environmental protection as a result. It currently takes 18 months to get a single permit to drill a well on federal land. It should take three weeks. Before 2020, it took about a month to obtain a federal permit.

2025 will be the year we begin to return to regulatory efficiency without sacrificing the protections the rules and policies set out to accomplish in the first place.

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Adam Hirschfeld and Jacob Gritte are executives at Austin-basedWorkrise, the leading labor provider and source-to-pay solution for energy companies throughout Texas and beyond.

Some of those counties affected include production hot spots within the San Juan Basin in northwestern New Mexico and the Permian Basin, which straddles the New Mexico-Texas line. Photo via Getty Images

New Mexico court upholds emissions crackdown impacting oil, gas operations along Texas border

eyes on the west

The New Mexico Court of Appeals has upheld regulations aimed at cracking down on emissions in one of the nation’s top-producing oil and gas states.

The case centered on a rule adopted in 2022 by state regulators that called for curbing the pollutants that chemically react in the presence of sunlight to create ground-level ozone, commonly known as smog. High ozone levels can cause respiratory problems, including asthma and chronic bronchitis.

Democratic Gov. Michelle Lujan Grisham's administration has long argued that the adoption of the ozone precursor rule along with regulations to limit methane emissions from the industry were necessary to combat climate change and meet federal clean air standards.

New Mexico Environment Secretary James Kenney said the court's decision on Wednesday affirmed that the rule was properly developed and there was substantial evidence to back up its approval by regulators.

“These rules aren’t going anywhere,” Kenney said in a statement to The New Mexican, suggesting that the industry stop spending resources on legal challenges and start working to comply with New Mexico's requirements.

The Independent Petroleum Association of New Mexico had argued in its appeal that the rule disproportionately affected independent operators.

“The administration needs to stop its ‘death by a thousand cuts’ hostility to the smaller, family-owned, New Mexico-based operators,” the group's executive director, Jim Winchester, said in an email to the newspaper.

The group is considering its legal options.

Under the rule, oil and gas operators must monitor emissions for smog-causing pollutants — nitrogen oxides and volatile organic compounds — and regularly check for and fix leaks.

The rule applies to eight counties — Chaves, Doña Ana, Eddy, Lea, Rio Arriba, Sandoval, San Juan and Valencia — where ozone pollutants have reached at least 95% of the federal ambient air quality standard. Some of those counties include production hot spots within the San Juan Basin in northwestern New Mexico and the Permian Basin, which straddles the New Mexico-Texas line.

The industry group had argued that Chaves and Rio Arriba counties shouldn’t be included. The court disagreed, saying those counties are located within broader geographic regions that did hit that 95% threshold.

The NOV Supernova Accelerator will work to cultivate relationships between startups and NOV. Photo via Getty Images

NOV's Houston accelerator names inaugural cohort to propel digital transformation in energy

building tech

Houston-based Venture Builder VC has kicked off its NOV Supernova Accelerator and named its inaugural cohort.

The program, originally announced earlier this year, focuses on accelerating digital transformation solutions for NOV Inc.'s operations in the upstream oil and gas industry. It will support high-potential startups in driving digital transformation within the energy sector, specifically upstream oil and gas, and last five months and culminate in a demo day where founders will present solutions to industry leaders, potential investors, NOV executives, and other stakeholders.

The NOV Supernova Accelerator will work to cultivate relationships between startups and NOV. They will offer specific companies access to NOV’s corporate R&D teams and business units to test their solutions in an effort to potentially develop long-term partnerships.

“The Supernova Accelerator is a reflection of our commitment to fostering forward-thinking technologies that will drive the future of oil and gas,” Diana Grauer, director of R&D of NOV, says in a news release.

The cohort’s focus will be digital transformation challenges that combine with NOV’s vision and include data management and analytics, operational efficiency, HSE (Health, Safety, and Environmental) monitoring, predictive maintenance, and digital twins.

Startups selected for the program include:

  • AnyLog, an edge data management platform that replaces proprietary edge projects with a plug-and-play solution that services real-time data directly at the source, eliminating cloud costs, data transfer, and latency issues.
  • Equipt, an AI-powered self-serve platform that maximizes Asset & Field Service performance, and minimizes downtime and profit leakages.
  • Geolumina's platform is a solution that leverages data analytics to enhance skills, scale insights, and improve efficiency for subsurface companies.
  • Gophr acts as the "Priceline" of logistics, using AI to provide instant shipping quotes and optimize dispatch for anything from paper clips to rocket ships.
  • IoT++ simplifies industrial IoT with a secure, AI-enabled ecosystem of plug-and-play edge devices.
  • Kiana's hardware-agnostic solution secures people, assets, and locations using existing Wi-Fi, Bluetooth, UWB, and cameras, helping energy and manufacturing companies reduce risks and enhance operations.
  • Novity uses AI and physics models to accurately predict machine faults, helping factory operators minimize downtime by knowing the remaining useful life of their machines.
  • Promecav is redefining crude oil conditioning with patented technology that slashes water use and energy while reducing toxic exposure for safer, cleaner, and more sustainable oil processing.
  • RaftMind's enterprise AI solution transforms how businesses manage knowledge. Our advanced platform makes it easier to process data and unlock insights from diverse sources.
  • Spindletop AI uses edge-based machine learning to make each well an autonomous, self-optimizing unit, cutting costs, emissions, and cloud dependence.
  • Taikun.ai combines generative AI with SCADA data to create virtual industrial engineers, augmenting human teams for pennies an hour.
  • Telemetry Insight’s platform utilizes high-resolution accelerometer data to simplify oilfield monitoring and optimize marginal wells for U.S. oil and gas producers via actionable insights.
  • Visual Logging utilizes fiber optic and computer vision technology to deliver real-time monitoring solutions, significantly enhancing data accuracy by providing precise insights into well casing integrity and flow conditions.

“Each startup brings unique solutions to the table, and we are eager to see how these technologies will evolve with NOV’s support and expertise,” Billy Grandy, general partner of Venture Builder VC, says in the release. “This partnership reflects our ongoing commitment to nurturing talent and driving innovation within the energy sector.”

Venture Builder VC is a consulting firm, investor, and accelerator program.

“Unlike mergers and acquisitions, the venture client model allows corporations like NOV to quickly test and implement new technologies without committing to an acquisition or risking significant investment,” Grandy previously said about the accelerator program.

Exxon earned $8.6 billion, or $1.92 per share, for the three months ended Sept. 30. Photo via ExxonMobil.com

ExxonMobil beats profit forecast with Q3 surge, powered by acquisition, production gains

by the numbers

ExxonMobil's third-quarter profit beat analysts' expectations, as the oil and gas giant was helped by contributions from Pioneer Natural Resources, a recent acquisition.

Exxon earned $8.6 billion, or $1.92 per share, for the three months ended Sept. 30. A year earlier the Spring, Texas-based company earned $9.07 billion, or $2.25 per share.

The performance topped Wall Street's expectations, though Exxon does not adjust its reported results based on one-time events such as asset sales. Analysts surveyed by Zacks Investment Research were calling for earnings of $1.91 per share.

Revenue totaled $90.02 billion, falling short of Wall Street’s estimate of $93.51 billion.

Exxon’s net production reached 4.6 million oil-equivalent barrels per day during the third quarter, an increase of 5% compared with the previous quarter.

Oil prices have been falling recently after a retaliatory strike by Israel on Iran targeted military sites rather than the oilfields of the world’s seventh largest producer of crude. The long-term expectation is for oil prices to move lower, not higher. That’s because the balance between supply and demand has tilted toward supply, a dynamic that typically deflates oil prices.

Exxon announced in July 2023 that it would pay $4.9 billion for Denbury Resources, an oil and gas producer that has entered the business of capturing and storing carbon and stands to benefit from changes in U.S. climate policy.

Three months later it said it would spend $60 billion on shale operator Pioneer Natural Resources. That deal received clearance from the Federal Trade Commission in May.

Exxon said its board approved a 4% increase in its quarterly dividend, 99 cents per share.

Also on Friday, Chevron Corp. reported an adjusted profit of $2.51 per share on revenue of $50.67 billion. Wall Street was looking for a profit of $2.47 per share on revenue of $49.88 billion. Similar to Exxon, Chevron does not adjust its reported results based on one-time events such as asset sales.

Revenue and net income were lower than a year ago at the San Ramon, California, company, which is relocating its headquarters to Houston by year-end.

Chevron said it's continuing asset sales and is now targeting structural cost cuts of $2 billion to $3 billion through 2026, although it didn't provide specific details.

In morning trading, Exxon shares rose 35 cents to $117.13 while Chevron shares rose 3% to $153.69.

The new initiative will take stranded natural gas and turn it into hydrogen. Photo via Getty Images

New York financial firm partners with Houston O&G co. to turn natural gas into blue hydrogen

teamwork

A new partnership between an energy and sustainability investor and a Houston-based company that focuses on cleaner solutions in the oil and gas industry will look into turning stranded natural gas into blue hydrogen.

New York-based Double Zero Holdings and SJ Environmental announced their new partnership this week in an effort to move forward the energy transition. According to the companies, stranded natural gas — mostly methane — usually remains unused where it is not economically viable to transport. By turning these gasses into into blue hydrogen, "the partnership mitigates methane and CO2 emissions while producing hydrogen—a clean fuel that could revolutionize multiple industries," reads the news release.

The initiative will use existing technologies, which can be reduced to the size of a standard shipping container, per the release.

"We're thrilled to partner with SJ Environmental to tackle one of the most pressing environmental issues today," Raja Ramachandran, managing partner of Double Zero Holdings, says in the release. "This collaboration allows us to turn stranded natural gas—a significant environmental liability—into a valuable resource, supporting the global shift toward cleaner energy."

The plan is to lower the amount of natural gas left wasted and provide a low-carbon alternative across transportation, manufacturing, and power generation.

"Our collaboration with Double Zero Holdings reflects our commitment to innovative, sustainable solutions," SJ Environmental Director John Chappell adds. "Together, we're setting a new standard for energy production, delivering hydrogen and food-grade CO₂ where natural gas would typically be flared."

Houston-based ROGII has acquired a new software to integrate into its platform. Photo via ROGII.com

Houston geology software provider makes strategic acquisition to expand platform

growing

An advanced geosteering, geoscience, and drilling software solutions company based in Houston has announced the acquisition of of a software platform.

ROGII plans to acquire TerraSLS's TLog Mudlog Editor software, which is used to generate vertical, and horizontal striplogs for use by geologists. The acquisition “will significantly enhance ROGII's product offerings by providing operators and clients with unprecedented real-time connectivity to mudlogging data,” according to ROGII. Mudlogging is a process that involves examining the cuttings of rock brought to the surface by the drilling.

“Our acquisition of TLog marks another step forward in our mission to deliver the most advanced, real-time data solutions to the oil and gas industry,” CEO of ROGII Igor B. Uvarov says in a news release. “The integration of TLog’s capabilities into our Solo Cloud platform will revolutionize the way operators and mudlogging service companies interact, making mudlogging a truly real-time process and driving greater efficiency and collaboration.”

One way it works is that ROGII will integrate TLog into its Solo Cloud platform, which will advance mudlogging data. This gathers it all into a real-time data exchange between mudlogging service companies and its operators.

The integration will allow operators to monitor mudlogging activities in real-time, which means a possible faster and more informed decision-making processes. The user will get immediate access to data, which can help enhance collaboration and improve efficiency. In addition, the mudlogging data will be safely stored on Solo Cloud for future analysis and data integration, which assists with maintaining integrity of the data.

“We look forward to investing in further development of TLog, increasing user-friendliness, expanding adoption worldwide, and making it the industry standard, being used by all mudlogging service companies,” Uvarov adds.
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Houston companies scoop up $31 million in funds from DOE, EPA methane emissions program

fresh funds

The U.S. Department of Energy and the U.S. Environmental Protection Agency announced the selection of seven projects from Houston companies to receive funding through the Methane Emissions Reduction Program.

The projects are among 43 others nationwide, including 12 from Texas, that reduce, monitor, measure, and quantify methane emissions from the oil and gas sector. The DOE and EPA awarded $850 million in total through the program.

The Houston companies picked up $31.7 million in federal funding through the program in addition to more than $9.5 million in non-federal dollars.

“I’m excited about the opportunities these will create internally but even more so the creation of jobs and training opportunities for the communities in which we work,” Scott McCurdy, Encino Environmental Services CEO, said in a news release. His company received awards for two projects.

“These projects will allow us to further support and strengthen the U.S. Energy industry’s ability to deliver clean, reliable, and affordable energy globally,” he added.

The Houston-area awards included:

DaphneTech USA LLC

Total funding: $5.8 million (approximately $4.5 million in federal, $1.3 million in non-federal)

The award was granted for the company’s Daphne and Williams Methane Slip Abatement Plasma-Catalyst Scale-Up project. Daphne will study how its SlipPure technology, a novel exhaust gas cleaning system that abates methane and exhaust gas pollution from natural gas-fueled engines, can be economically viable across multiple engine types and operating conditions.

Baker Hughes Energy Transition LLC 

Total funding: $7.47 million (approximately $6 million in federal, $1.5 million in non-federal)

The award was granted for the company’s Advancing Low Cost CH4 Emissions Reduction from Flares through Large Scale Deployment of Retrofittable and Adaptive Technology project. The project aims to develop a scalable, integrated methane emissions reduction system for flares based on optical gas imaging and estimation algorithms.

Encino Environmental Services

Total funding: $15.17 million (approximately $11 million in federal, $4.17 million in non-federal)

The award was granted for two projects. The Advanced Methane Reduction System: Integrating Infrared and Visual Imaging to Assess Net Heating Value at the Combustion Zone and Determine Combustion Efficiency to Enhance Flaring Performance project aims to develop and deploy an advanced continuous emissions monitoring system. It’s Advancing Methane Emissions Reduction through Innovative Technology project will develop and deploy a technology using sensors and composite materials to address emissions originating in storage tanks.

Envana Software Solutions

Total funding: $5.26 million (approximately $4.2 million in federal, $1 million in non-federal)

The award was granted for the company’s Leak Detection and Reduction Software to Identify Methane Emissions and Trigger Mitigation at Oil and Gas Production Facilities Based on SCADA Data project. It aims to improve its Recon software for monitoring methane emissions and develop partnerships with local universities and organizations.

Capwell Services Inc.

Total funding: $4.19 million (approximately $3.3 million in federal, $837,000 in non-federal)

The award was granted for its Methane Emissions Abatement Technology for Low-Flow and Intermittent Emission Sources project. It aims to to deploy and field-test a methane abatement unit and improve air quality and health outcomes for communities near production facilities and establish field technician internships for local residents.

Blue Sky Measurements 

Total funding: $3.41 million (approximately $2.7 million in federal, $683,000 in non-federal)

The award was granted for its Field Validation of Novel Fixed Position Optical Sensor for Fugitive Methane Emission Detection Quantification and Location with Real-Time Notification for Rapid Mitigation project. It aims to field test an optical sensing technology at six well sites in the Permian Basin.

Southern Methodist University, The University of Texas at Austin, Texas A&M Engineering Experiment Station and Hyliion Inc. were other Texas-based organizations to earn awards. See the full list of projects here.

Texas university's 'WaterHub' will dramatically reduce water usage by 40%

Sustainable Move

A major advancement in sustainability is coming to one Texas university. A new UT WaterHub at the University of Texas at Austin will be the largest facility of its kind in the U.S. and will transform how the university manages its water resources.

It's designed to work with natural processes instead of against them for water savings of an estimated 40 percent. It's slated for completion in late 2027.

The university has had an active water recovery program since the 1980s. Still, water is becoming an increasing concern in Austin. According to Texas Living Waters, a coalition of conservation groups, Texas loses enough water annually to fill Lady Bird Lake roughly 89 times over.

As Austin continues to expand and face water shortages, the region's water supply faces increased pressure. The UT WaterHub plans to address this challenge by recycling water for campus energy operations, helping preserve water resources for both the university and local communities.

The 9,600-square-foot water treatment facility will use an innovative filtration approach. To reduce reliance on expensive machinery and chemicals, the system uses plants to naturally filter water and gravity to pull it in the direction it needs to go. Used water will be gathered from a new collection point near the Darrell K Royal Texas Memorial Stadium and transported to the WaterHub, located in the heart of the engineering district. The facility's design includes a greenhouse viewable to the public, serving as an interactive learning space.

Beyond water conservation, the facility is designed to protect the university against extreme weather events like winter storms. This new initiative will create a reliable backup water supply while decreasing university water usage, and will even reduce wastewater sent to the city by up to 70 percent.

H2O Innovation, UT’s collaborator in this project, specializes in water solutions, helping organizations manage their water efficiently.

"By combining cutting-edge technology with our innovative financing approach, we’re making it easier for organizations to adopt sustainable water practices that benefit both their bottom line and the environment, paving a step forward in water positivity,” said H2O Innovation president and CEO Frédéric Dugré in a press release.

The university expects significant cost savings with this project, since it won't have to spend as much on buying water from the city or paying fees to dispose of used water. Over the next several years, this could add up to millions of dollars.

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A version of this story originally appeared on our sister site, CultureMap Austin.

Report: Texas solar power, battery storage helped stabilize grid in summer 2024, but challenges remain

by the numbers

Research from the Federal Reserve Bank of Dallas shows that solar power and battery storage capacity helped stabilize Texas’ electric grid last summer.

Between June 1 and Aug. 31, solar power met nearly 25 percent of midday electricity demand within the Electric Reliability Council of Texas (ERCOT) power grid. Rising solar and battery output in ERCOT assisted Texans during a summer of triple-digit heat and record load demands, but the report fears that the state’s power load will be “pushed to its limits” soon.

The report examined how the grid performed during more demanding hours. At peak times, between 11 a.m. and 2 p.m. in the summer of 2024, solar output averaged nearly 17,000 megawatts compared with 12,000 megawatts during those hours in the previous year. Between 6 p.m. and 9 p.m., discharge from battery facilities averaged 714 megawatts in 2024 after averaging 238 megawatts for those hours in 2023. Solar and battery output have continued to grow since then, according to the report.

“Batteries made a meaningful contribution to what those shoulder periods look like and how much scarcity we get into during these peak events,” ERCOT CEO Pablo Vegas said at a board of directors conference call.

Increases in capacity from solar and battery-storage power in 2024 also eclipsed those of 2023. In 2023 ECOT added 4,570 megawatts of solar, compared to adding nearly 9,700 megawatts in 2024. Growth in battery storage capacity also increased from about 1,500 megawatts added in 2023 to more than 4,000 megawatts added in 2024. Natural gas capacity also saw increases while wind capacity dropped by about 50 percent.

Texas’ installation of utility-scale solar surpassed California’s in the spring of last year, and jumped from 1,900 megawatts in 2019 to over 20,000 megawatts in 2024 with solar meeting about 50 percent of Texas' peak power demand during some days.

While the numbers are encouraging, the report states that there could be future challenges, as more generating capacity will be required due to data center construction and broader electrification trends. The development of generating more capacity will rely on multiple factors like price signals and market conditions that invite more baseload and dispatchable generating capacity, which includes longer-duration batteries, and investment in power purchase agreements and other power arrangements by large-scale consumers, according to the report.

Additionally, peak demand during winter freezes presents challenges not seen in the summer. For example, in colder months, peak electricity demand often occurs in the early morning before solar energy is available, and it predicts that current battery storage may be insufficient to meet the demand. The analysis indicated a 50% chance of rolling outages during a cold snap similar to December 2022 and an 80% chance if conditions mirror the February 2021 deep freeze at the grid’s current state.

The report also claimed that ERCOT’s energy-only market design and new incentive structures, such as the Texas Energy Fund, do not appear to be enough to meet the predicted future magnitude and speed of load growth.

Read the full report here.