Texas Electricity Market Update: Q1 2026

In this blog, David Kinchen, COO, Energy Ogre, provides a Texas electricity market update for the first quarter of 2026. David assembled key metrics, provided important insights, and gave Energy Ogre members five clear summaries of what they should know about the market in Q1.

Bottom Line Upfront: What This Means for Energy Ogre Members

• Your rate is going up. By how much? That depends on when you act. Texas residential rates have climbed ~5.75% year-over-year to 15.87¢/kWh. Wholesale prices at ERCOT's North Hub are forecast up ~45% in 2026, driven by summer demand spikes. The spread between the best available fixed rate and an expired or default variable plan can cost members $30–$60 or more per month. This is exactly what Energy Ogre manages on your behalf.
• Winter risk is under appreciated. Forward winter peak prices are trending upward through 2029, reflecting persistent vulnerability to natural gas supply disruptions during freezes. Texas natural gas production fell nearly 20% during recent cold events. A winter plan expiration carries real exposure.
• Delivery fees are rising regardless of your provider. Oncor's $47.5B capital plan and CenterPoint's hurricane recovery surcharges will both increase the delivery portion of your bill by approximately $2.00/month each. These fees are identical no matter which retail provider you choose. This makes the energy charge that Energy Ogre optimizes even more impactful.
• The data center boom is reshaping the Texas grid structurally. With 233+ GW of large load requests in ERCOT's queue—up 269% in one year—demand pressure is long-term, not seasonal. It is driving wholesale prices, transmission investment, and infrastructure costs higher for years ahead.
• The market is more complex than it has ever been. A landmark ERCOT market redesign (RTC+B), Senate Bill 6 implementation, a $9.4B transmission backbone, and record battery and solar buildouts are all in motion simultaneously. Energy Ogre tracks all of it so you don't have to.

What Are Texas Electricity Rates in Q1 2026?

Texas residential rates have risen to approximately 15.87¢/kWh as of early March 2026, according to the EIA. This effective rate is up roughly 5.75% from one year ago. Texas still sits about 10% below the national average of 18.05¢/kWh, but the gap is narrowing.

At the wholesale level, the EIA projected ERCOT's North Hub prices up roughly 45% in 2026 versus 2025, driven not by flat averages but by large hourly spikes during summer peak hours when demand is high and renewable output is limited. The EIA's November 2025 Short-Term Energy Outlook forecast the national load-weighted average wholesale price reaching $51/MWh in 2026. This average is an 8.5% increase over 2025's already-elevated $47/MWh. Meanwhile, ERCOT is driving up a disproportionate share of that increase.

Natural gas is a key pressure point. The Henry Hub spot price is projected to average $4.00/MMBtu in 2026, up from ~$3.10 in 2025, as LNG export demand rises faster than domestic production. Since natural gas remains ERCOT's largest fuel source, these cost pressures flow directly to retail rates. Forward summer on-peak contracts for Texas hubs have been trading well above $50/MWh. This reflects how market participants are pricing in weather risk, DFW data center load growth, and supply uncertainty.

Sources: EIA Electric Power Monthly (February 2026); EIA Short-Term Energy Outlook (November 2025); QuickElectricity Rate Comparison (March 2026)

What Is ERCOT's Generation Mix in 2026? How Much Solar, Wind, and Battery Storage Is on the Texas Grid?

In the first nine months of 2025, wind and solar together met 36% of ERCOT's total electricity demand, according to the EIA. This total electricity demand value is up dramatically from just a few years prior.

Solar

Utility-scale solar generated 45 TWh in the first nine months of 2025—50% more than the same period in 2024 and nearly four times the output from 2021. Texas installed an estimated 7.4 GW of new solar capacity in the first nine months of 2025, nearly double California's additions. The EIA projects ERCOT solar generation will grow from 56 billion kWh in 2025 to 106 billion kWh by 2027—effectively doubling in two years. This surge is suppressing midday wholesale prices: solar generators averaged 24 GW between noon and 1 p.m. in summer 2025, up from 12 GW at the same hour in summer 2023, pushing natural gas's midday share from 50% in 2023 down to 37% in 2025.

Battery Storage

ERCOT had over 14 GW of installed battery capacity as of mid-2025. 14 GW of capacity is nearly three times the amount operational in early 2023. In Q3 2025 alone, a record 2 GW of new storage came online in a single quarter. The EIA projects battery capacity in ERCOT expanding to 37 GW by the end of 2027. During summer 2025, batteries discharged an average of 4 GW at 8:00 p.m. as solar declined, and set three new peak discharge records in late July, peaking at 7,152 MW in a single interval.

Natural Gas

Natural gas remains ERCOT's largest source at approximately 42–43% of total generation, shifting toward peak hours and cold-weather reliability rather than around-the-clock baseload. New thermal plant development has lagged dramatically: only 972 MW of new thermal capacity is expected online by summer 2026, versus nearly 23 GW of new solar. ERCOT's 2026 Long-Term System Assessment identifies an eventual need for 49.3 GW of additional gas capacity, 40.7 GW of solar, 87.7 GW of battery storage, and 29.6 GW of wind to meet projected long-term demand.

Sources: EIA Today in Energy–ERCOT Generation Mix (October 2025); EIA Solar Generation Forecast (January 2026); ERCOT Monthly Report (July 2025); Modo Energy Battery Buildout Report–Q3 2025; Federal Reserve Bank of Dallas Energy Economics (January 2025); ERCOT 2026 LTSA

Why Is Texas Electricity Demand Growing So Fast? What Is Driving ERCOT Load Growth in 2026?

The EIA projects ERCOT demand growing at an average rate of 11% in 2025 and 2026 combined—compared to 4% in PJM and 2.2% nationally. ERCOT's total demand is forecast to reach 425 TWh in the first nine months of 2026, a 14% increase over the same period in 2025.

Data Centers and Cryptocurrency Mining

As of late 2025, ERCOT was assessing more than 233 GW of large load interconnection requests—up 269% in just one year. More than 70% of this GW comes from data centers. Texas currently hosts 342 data centers drawing 7.6 GW continuously, with DFW accounting for the highest concentration. OpenAI, SoftBank, and Oracle's Stargate initiative has 10 data centers already under construction in Texas with 10 more planned. ERCOT's adjusted long-term peak demand forecast projects 145 GW by 2031, up from ~87 GW at peak in 2025, with the data center sector alone expected to account for 78 GW of demand by 2031.

Senate Bill 6: New Rules for Large Loads Starting 2026

SB 6 requires new facilities drawing more than 75 MW from the grid to curtail load during emergencies. This is Texas's first formal regulatory intervention that requires large users to share grid responsibility. SB 6 also mandates a $100,000 interconnection fee and disclosure of duplicate requests elsewhere in Texas, intended to reduce "phantom loads" inflating planning forecasts.

Is the Texas Grid Reliable in Winter?

ERCOT managed summer 2025 without major close calls thanks to expanded solar and battery capacity, but winter risk remains elevated. ERCOT issued multiple cold weather advisories and geomagnetic disturbance (GMD) warnings in January 2026. Before sunrise and after sunset, solar and storage provide limited support during extreme winter hours. This leaves natural gas performance as the primary variable. Texas natural gas production has experienced declines of nearly 20% during recent cold events.

Sources: EIA ERCOT Demand Forecast (July 2025); EIA STEO (December 2025); Utility Dive, Large Load Queue (January 2026); ERCOT Operational Overview (January 2026); Yes Energy ERCOT Load Growth Analysis

What Are Oncor, CenterPoint, and ERCOT Doing in 2026? Major Texas Utility and Grid Updates

ERCOT: Real-Time Co-Optimization Plus Batteries (RTC+B), December 2025

On December 5, 2025, ERCOT launched Real-Time Co-Optimization Plus Batteries (RTC+B). These batteries have become the most significant structural change to the Texas electricity market in 15 years. Under RTC+B, energy and ancillary services are co-optimized simultaneously every five minutes in real time, with battery state-of-charge now a live input to dispatch decisions. ERCOT's CEO called it "the most substantial enhancement to the Real-Time Nodal market design since its inception in 2010." The Independent Market Monitor projects $2.5–$6.4 billion in annual wholesale market savings through more efficient dispatch. ERCOT also launched two new internal organizations in January 2026: Interconnection and Grid Analysis and Enterprise Data and AI. These organizations were created to modernize handling of the data center interconnection surge.

Oncor: $47.5 Billion Capital Plan (2026–2030)

In February 2026, Oncor Electric Delivery announced a $47.5 billion capital plan for 2026–2030, plus an additional $10 billion in incremental capital opportunities. A pending base rate settlement implies approximately $560 million in additional revenue, translating to roughly $2.00/month for a typical residential customer using 1,000 kWh, subject to PUCT approval. Oncor's interconnection queue as of year-end 2025 included 650 active large commercial and industrial requests, including approximately 255 GW from data centers within its service territory.

What Is the 765-kV Transmission Project in Texas?

ERCOT and its major TDSPs are advancing a statewide 765-kV high-voltage transmission backbone capable of moving more than twice the power of Texas's current 345-kV system. The jointly proposed Eastern Backbone project spans approximately 1,108 miles of new right-of-way, carries an estimated cost of $9.4 billion, and has a projected in-service date of 2030–2032. Oncor anticipates filing approximately 18 new CCN applications in 2026, including three for Permian Basin 765-kV import paths. Near-term costs appear in delivery charges; long-term benefits are reduced congestion and improved grid resilience.

CenterPoint Energy: Why Are Houston Electric Bills Going Up in 2026?

CenterPoint Energy received PUCT approval to recover costs from Hurricanes Beryl and Francine (summer 2024) and Winter Storm Enzo (early 2025) over up to 14 years, with a projected residential impact of approximately $2.00/month for a customer using 1,000 kWh. CenterPoint delivery charges update each March and September, so the March 2026 adjustment reflects these recovery costs. CenterPoint's average retail rate as of early March 2026 is approximately 15.33¢/kWh.

Sources: ERCOT RTC+B Launch Announcement (December 5, 2025); ERCOT Strategic Organizational Changes (December 12, 2025); Oncor 2025 Annual Results and Capital Plan (February 2026); ERCOT 765-kV STEP Eastern Backbone Report; REsurety RTC+B Analysis; Click2Houston CenterPoint Rate Report (August 2025)

About This Analysis

Energy Ogre is a Texas-based electricity management service that monitors the ERCOT deregulated market on behalf of its members. Energy Ogre is compensated exclusively by its members and not by retail electricity providers. This makes Energy Ogre one of the only independent sources of market analysis for Texas residential electricity consumers. This quarterly market update is produced by Energy Ogre's in-house market analysis team using data from the EIA, ERCOT, utility filings, and proprietary member plan data.

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