ERCOT's RTC+B Market Reform and Its Impact on Energy Storage Valuation

The implementation of ERCOT's Real-Time Co-Optimization Plus Batteries (RTC+B) on December 5, 2025, marks a seismic shift in Texas's wholesale electricity market. By integrating energy storage resources (ESRs) as a single device with a state-of-charge into real-time market operations, the reform aims to enhance grid efficiency, reduce congestion, and unlock new revenue streams for battery assets. However, the economic implications for energy storage are complex, balancing transformative opportunities with emerging challenges. This analysis evaluates how RTC+B reshapes the valuation of battery assets, drawing on post-implementation data and market dynamics.

A Paradigm Shift in Market Design

RTC+B replaces the traditional Operating Reserve Demand Curve (ORDC) with Ancillary Service Demand Curves (ASDCs), enabling individual pricing for ancillary services and co-optimizing energy and reserves every five minutes. This shift allows batteries to bid as unified resources, rather than as separate charging and discharging entities, streamlining their participation in the market. The Security-Constrained Economic Dispatch (SCED) now incorporates battery state-of-charge constraints, ensuring more precise dispatch decisions. According to a report by Resurety, these changes are projected to yield annual wholesale market savings of $2.5–$6.4 billion by optimizing resource utilization.

Revenue Streams and Ancillary Service Opportunities

The reform's most immediate impact is on ancillary service earnings. Under RTC+B, batteries can dynamically toggle between energy and ancillary service roles every five minutes, responding to real-time grid needs. This flexibility is expected to increase liquidity and competition in the market, potentially reducing price volatility. However, post-implementation data reveals a sharp decline in ancillary service revenues for battery energy storage systems (BESS). As noted by Enverus, average annual BESS revenues in ERCOT fell from $149 per kilowatt in 2023 to $17 per kilowatt in 2025, with ancillary services accounting for just 48% of revenue compared to 84% previously. This decline is attributed to market saturation, with over 11 gigawatts of BESS capacity installed by mid-2025.

The introduction of ASDCs has further altered revenue dynamics. By pricing ancillary services based on real-time scarcity, the new framework incentivizes batteries to provide reserves during periods of high demand. Case studies from Enverus highlight the potential for cost savings: the "Solar Cliff" scenario demonstrated a 5.5% reduction in system costs by avoiding curtailment of excess solar energy through strategic battery re-dispatch. However, operators must now navigate tighter state-of-charge constraints and performance standards, requiring advanced optimization tools to avoid penalties.

Capacity Payments and Operational Complexity

RTC+B also redefines capacity payments for battery assets. The market now includes financial binding ancillary service offers in the day-ahead market, set settled in real time based on imbalances. This structure introduces new settlement rules and payment mechanisms, such as updated calculations for set-point deviations and revised emergency operations protocols. While these changes aim to ensure fair compensation, they also increase operational complexity. Operators must invest in automation and forecasting tools to manage real-time decision-making, as manual interventions are no longer viable.

The transition to a single-device model for batteries has simplified data submission but introduced challenges in capacity qualification. For example, the duration threshold for certain ancillary services like ECRS has been reduced to one hour, allowing more battery capacity to qualify. However, this flexibility comes at the cost of reduced revenue predictability, as operators must now rely on arbitrage and scarcity frequency to maximize returns.

Strategic Adaptation for Operators

To thrive under RTC+B, battery operators must adopt dynamic bidding strategies and leverage advanced analytics. The ability to submit up to ten bid pairs per interval for energy and five for ancillary services requires sophisticated optimization models. Additionally, the new market design supports multi-hour block products in the day-ahead market, enabling operators to hedge against volatility. Yet, these opportunities are offset by the need to comply with the Constraint Competitiveness Test (CCT), which evaluates both injection and withdrawal capabilities of battery resources.

Conclusion: Balancing Opportunity and Risk

ERCOT's RTC+B reform represents a pivotal step toward a more flexible and efficient grid, with batteries playing a central role in this evolution. While the program promises significant cost savings and operational improvements, it also pressures battery profitability due to market saturation and declining ancillary service revenues. For investors, the key lies in assessing operators' ability to adapt to this new paradigm-those with advanced optimization tools and strategic site selection will likely outperform peers. As the market matures, the long-term economic viability of battery assets will depend on their capacity to leverage real-time co-optimization and navigate the evolving regulatory landscape.