ERCOT’s Battery Proposal Would Dispatch Locally and Pay Regionally

ERCOT’s proposed next step for aggregated batteries would give dispatch instructions a more precise address. The batteries would respond to conditions at their local grid connection while continuing to receive a regional price. Early November prices show how far those two signals can separate.

Across 882 dispatch runs on November 1–3, Ask the Grid found 323 runs, or 36.6%, with at least one resource node below −$5/MWh while every published load-zone price exceeded $5/MWh. The same instant could carry an incentive to absorb power locally and a positive regional price. This market-wide screen measures the separation between price geographies.

ERCOT posted a revised Phase 4 draft on November 2 for its aggregated distributed energy resource pilot. Its November 4 presentation proposes an aggregated storage resource built from devices behind one substation transformer, with at least 1 MW of combined response capability. The operator would see the batteries’ state of charge and use their local effect on transmission constraints when issuing dispatch instructions.

Today’s pilot models aggregations as controllable load and represents their response across an entire load zone. ERCOT says earlier pilot work found that this regional representation and a more local calculation could diverge, sometimes in opposite directions. A response that appears helpful across the zone can therefore aggravate a particular constraint.

Phase 4 would retain settlement at the applicable load-zone price, without a make-whole payment for the difference. ERCOT would study the mismatch and what a later move to nodal settlement would require. Distribution utilities would continue to review each aggregation and could impose local participation limits.

One dispatch run makes the price geography visible. At 4:45 p.m. Central on November 2, three PSA resource nodes were priced at −$276.16/MWh, while the eight load zones ranged from $11.67 to $244.51/MWh. The three nodes provide an observed example of the separation. A participant’s outcome depends on its actual location, dispatch and settlement records.

For an aggregator, the useful next measurement is the frequency and size of that difference at its own connection. ERCOT’s proposal would make the aggregation’s physical location explicit while preserving the wider payment boundary. The pilot’s reports would show how that trade-off affects participation and whether local dispatch provides useful congestion relief.

ERCOT’s stated schedule seeks Technical Advisory Committee endorsement on November 18 and Board consideration on December 7. Phase 4 remains proposed. Distribution-level limits, registration experience and measured congestion effects would become practical tests once the new participation model is operating.