• ERCOT battery economics shifting from ancillary services to arbitrage
• Data centers increasingly need batteries for ERCOT compliance
• Midwest utilities expanding storage through RFPs and IRPs

Falling ancillary prices in ERCOT are pushing battery companies like FlexGen toward data center customers as load demand surges across the state.

FlexGen is no stranger to Texas with 4 GWh of supplied projects operating in ERCOT including roughly 30 distribution connected projects below the 10 MW mark as well as utility-scale projects developed by firms including SMT Energy and Greenflash.

Executive VP of Business Development Jason Abiecunas calls ERCOT “one of the most technically demanding markets in the world” with new paradigms like RTC+B, multiple ancillary service streams, and a surge of battery storage capacity rushing to meet new load all mixing together.

It hasn’t been all full steam ahead for battery storage despite the growth, particularly on the ancillary services side which has seen prices drop precipitously since their 2022-2023 peak in an era with much less battery storage capacity on the grid. As a result, Abiecunas says its clients are shifting from an operating mode hovering around a 50 percent state of charge in an effort to capture ancillary services to running full arbitrage, two to three cycles per day, to capture opportunities in the morning and evening ramps.

And now, increasingly, he says developers are betting big on data centers, a new customer base he argues is starting to “come to terms with the need to have battery storage as key components of their projects.”

“We saw this coming a couple of years ago as the scale of development really started to ramp up with the realization that data centers at hundreds of MW scale really can’t operate effectively on the grid without battery storage,” Abiecunas said. “I think that’s an accepted fact in the industry now.”

As an example, Abiecunas points to ERCOT’s Nodal Operating Guide Revision Request (NOGRR) 282, approved by the Texas PUC last year, which establishes mandatory voltage and frequency ride-through requirements for large loads above 75 MW in an effort to prevent tripping during grid faults. Essentially, the provision requires facilities to ride through voltage sags and recoveries without dropping online and, critically, gives ERCOT authority to mandate disconnection for non-compliant facilities.

Abiecunas says this relatively recent requirement has left a number of data center projects currently under construction or near construction with a need for battery storage and says FlexGen is “working with several folks” to get batteries online for compliance.

This requirement also applies to islanded projects, another segment Abiecunas says is “really active” in the state, for which batteries are increasingly being sought as a balancing resource to keep gas turbines online. Abiecunas says those facilities “just will not work and stay in compliance with requirements without batteries” and that his team is “extremely busy on the front-end” working with data centers navigating ridethrough smoothing and medium-voltage uninterruptible (MVUPS) power supply needs.

Just how much storage capacity data centers need for compliance with NOGRR 282 varies, with larger loads naturally requiring larger batteries to “operate as a shock absorber for half up to nearly the full load of the facility depending on the size of the gas generation, configuration of the systems, and nuances of what the load looks like,” according to Abiecunas. For a 500 MW load, for instance, he says a battery may be needed to cover load swaying up to 400 MW.

“In many cases, they may not have full granularity on a model that won’t be deployed until 2027, but we do have good benchmarks to start the design process to get them off first base,” Abiecunas said.

Midwest Developments

Beyond the ERCOT data center market, Abiecunas says FlexGen is also continuing efforts to support IPPs and utilities, which are increasingly selecting battery storage resources via all-source and more targeted RFPs, in the Midwest. Abiecunas says the growth of viable markets beyond ERCOT and California is expanding into MISO, SPP and PJM where utilities are “viewing storage as a great tool to solve multiple grid problems while adding capacity.”

“We see really strong continued growth [with these customers] over the next 24 months,” Abiecunas said.

Abiecunas notes some “major differences” between an ERCOT data center customer and a longtime utility customer like Alliant, which FlexGen has worked with on storage supply deals over the past several years as the utility expands its storage fleet via co-located projects.

Primarily, he notes utilities like Alliant are primarily focused on power as their main product, which differs from the data centers usage of power as a servant to its main focus of compute ability. This contrast is exacerbated by MISO’s reliance on the utility model in favor of ERCOT’s more open wholesale model and MISO’s “edge toward being short on capacity” as generation struggles to keep up with demand thanks largely to the region’s lengthy interconnection process coupled with large scale coal retirements.

NPM Interconnection queue data is tracking 349 pre-operational storage projects in MISO of which 21 projects reached an advanced stage in the 12 months ending in May 2025.

As this landscape has developed, Abiecunas says he has noted storage increasingly showing up on utility IRPs for the last several years. Now, he says, “we’re starting to see the results of that play out” as utilities utilize storage to balance win and solar additions and seek to manage gas resources more efficiently.

While the MISO and SPP interconnection processes are constraining how much capacity can be added, Abiecunas says he is keeping his eye on interconnection points utilities have utilized across both regions sized for generation output at the maximum of what the intermittent load can hit opening the door for storage additions as utilities seek to “squeeze more juice out of these interconnections.”