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

The Electric Reliability Council of Texas (ERCOT) has completed a landmark overhaul of its wholesale electricity market with the December 5, 2025, implementation of the Real-Time Co-Optimization Plus Batteries (RTC+B) program. This reform, initiated in 2019 at the direction of the Public Utility Commission of Texas (PUCT), replaces the outdated Operating Reserve Demand Curve (ORDC) with Ancillary Service Demand Curves (ASDCs) and integrates battery storage as a unified asset with a state-of-charge (SoC) in real-time market operations. The shift aims to enhance grid efficiency, reduce costs, and better accommodate the growing share of renewable energy in Texas. However, the structural changes are reshaping battery economics and investment strategies in ways that demand careful scrutiny.

A New Market Architecture for Batteries

RTC+B co-optimizes energy and ancillary services in real time, allowing batteries to act as both generators and loads depending on grid conditions. This dynamic flexibility enables more precise valuation of storage assets, as their ability to provide frequency regulation, voltage support, and energy arbitrage is now priced through ASDCs, which adjust based on real-time demand. Unlike the previous Day-Ahead Market (DAM) model, where ancillary services were fixed, the new framework captures the temporal and locational value of batteries more accurately. According to a report by Enverus, this could lead to a more competitive and liquid ancillary services market, though it also risks reducing scarcity-based premiums if battery saturation grows.

The integration of SoC into market modeling is particularly transformative. By treating batteries as a single asset rather than separate charging and discharging entities, ERCOT can dispatch them more efficiently, minimizing curtailment of surplus renewable energy and maximizing arbitrage opportunities during peak demand. Ascend Analytics highlights that this could improve asset utilization rates, a critical metric for storage valuation.

Revenue Streams and Investment Opportunities

For battery operators, RTC+B opens new revenue avenues. The ability to participate in non-spin ancillary services-such as replacement reserves-and energy arbitrage during volatile periods is expected to diversify income streams. Additionally, the program supports Day-Ahead/Real-Time Spreads strategies and recommitment in real-time markets, offering more predictable returns for hybrid projects that combine storage with solar or wind generation.

Investors are also advised to leverage forward market contracts to hedge against the inherent volatility of ERCOT's energy prices. As stated by Resurety, a Texas-based energy analytics firm, hybrid strategies that lock in revenue during high-value periods while remaining agile in real-time markets could mitigate risks associated with price swings. This approach is particularly relevant given projections of persistent supply-demand imbalances in the late 2020s.

Challenges and Risks

Despite these opportunities, the reform introduces challenges. The increased efficiency of the market may erode the value of ancillary services if batteries become less scarce or less critical to grid stability. Enverus notes that battery profits in ERCOT have already declined in 2025 as market saturation rises, a trend that could accelerate under RTC+B. Operators must also navigate more complex data submission requirements, including precise SoC reporting and ancillary service deployment parameters.

Moreover, the five-minute dispatch intervals under RTC+B demand advanced operational expertise. As Canary Media observes, developers must now optimize for location-specific grid conditions, a shift that could favor larger players with sophisticated data analytics capabilities.

Conclusion

ERCOT's RTC+B program represents a pivotal step in modernizing Texas's energy market, but its impact on battery valuation is nuanced. While the reform enhances efficiency and unlocks new revenue streams, it also pressures operators to adapt to tighter margins and heightened competition. For investors, the key lies in balancing innovation-such as hybrid projects and dynamic bidding strategies-with prudent risk management. As the market evolves, the true test of RTC+B's success will be whether it sustains long-term profitability for storage assets while advancing grid reliability and decarbonization goals.