ERCOT's RTC+B and the Future of Energy Storage Investing

The transformation of Texas's electricity market through ERCOT's Real-Time Co-Optimization Plus Batteries (RTC+B) program represents one of the most significant structural shifts in energy markets in recent years. Implemented on December 5, 2025, this initiative reconfigures how energy and ancillary services are dispatched in real time, with profound implications for battery economics and grid resilience. As the Texas grid integrates an ever-growing share of renewable energy, the RTC+B framework seeks to optimize resource utilization, reduce costs, and enhance reliability. Yet, the transition has also exposed vulnerabilities in the business models of energy storage operators, raising critical questions for investors.

A New Market Architecture for Grid Flexibility

ERCOT's RTC+B program replaces the previous system of separate markets for energy and ancillary services with a co-optimized framework. By modeling batteries as a single device with a state of charge, the program enables real-time coordination of energy arbitrage and grid support services such as frequency regulation and voltage control according to Resurety. This integration is expected to eliminate inefficiencies from the old system, where batteries had to participate in multiple markets separately, often leading to suboptimal dispatch decisions as reported by YesEnergy.

The technical underpinnings of RTC+B include a Security Constrained Economic Dispatch (SCED) that runs every five minutes, ensuring that both energy and ancillary services are priced and allocated simultaneously according to YesEnergy. This approach reduces the need for manual interventions and allows batteries to respond dynamically to grid conditions. According to ERCOT, the program is projected to generate annual efficiency gains exceeding $1 billion by 2026, with broader wholesale market savings estimated at $2.5–$6.4 billion annually as detailed in Resurety's analysis. These figures underscore the potential for systemic cost reductions, particularly as Texas's grid faces increasing pressure from variable renewable generation.

The Double-Edged Sword for Battery Economics

While the RTC+B design promises operational efficiency, it has also disrupted the revenue streams of battery energy storage systems (BESS). By mid-2025, installed BESS capacity in ERCOT had surged to 11 gigawatts, with batteries providing over 7 gigawatt-hours during peak demand periods as reported by PV Magazine. However, market saturation has driven a sharp decline in profitability. Average annual revenue for BESS in ERCOT is projected to fall from $149 per kilowatt in 2023 to just $17 per kilowatt in 2025 according to Enverus. This collapse is partly attributed to the declining share of ancillary services in battery revenues, which has fallen from 84% to 48% over the same period according to Enverus.

The new market rules, including minimum state-of-charge requirements for ancillary services, have further complicated operations. For instance, Eolian, a major storage developer, ceased bidding its merchant battery fleet into the day-ahead ancillary services markets post-RTC+B, citing added duration constraints and uncertainty in service selection as reported by Canary Media. Such adaptations highlight the challenges operators face in navigating a system that prioritizes grid-wide optimization over individual asset returns.

Grid Resilience and the Path Forward

Despite these challenges, the RTC+B framework is expected to enhance grid resilience. By enabling batteries to participate in multiple markets simultaneously, the program reduces the risk of supply shortages during periods of high demand or generation volatility. According to a report by Resurety, the integration of batteries into real-time markets could improve system reliability by better managing transmission congestion and reducing the need for costly infrastructure upgrades as stated in ERCOT's release. Additionally, the replacement of Operating Reserve Demand Curves (ORDCs) with Ancillary Service Demand Curves (ASDCs) ensures that the value of different ancillary services is more accurately reflected in pricing according to Enverus.

For investors, the long-term outlook remains mixed. While the market is projected to become more competitive and efficient, the path to profitability for new storage projects is uncertain. Operators must now rely on strategic site selection, advanced forecasting tools, and sophisticated hedging strategies to mitigate revenue volatility according to Enverus. Energy arbitrage, though widespread, has not offset declining returns, with most major operators reporting year-to-date profitability below 2.2% according to Enverus.

Conclusion: Navigating Uncertainty in a Transformed Market

ERCOT's RTC+B program exemplifies the tension between systemic efficiency and asset-level economics in modern energy markets. For grid operators, the benefits are clear: enhanced reliability, reduced costs, and better integration of renewables. For investors, however, the transition demands a reevaluation of risk-return profiles. The next five years will be critical in determining whether the market can adapt to these structural changes. As Texas's grid evolves, the ability of storage developers to innovate in operational strategies-and to secure long-term contracts or regulatory support-will likely define the success of energy storage as an investment class.