Public Utility Commission of Texas Approves ERCOT’s Batch Zero Deadline Extensions

Relevant Documents:
PUCT Aug. 20 Meeting Recording
ERCOT’s Request for Good-Cause Exception (Aug. 10)
Aug. 3 Directive
June 10 Directive

The Public Utility Commission of Texas, or PUCT, on Thursday, Aug. 20, unanimously approved the Electric Reliability Council of Texas’, or ERCOT’s, request to delay key deadlines in its review of data centers and other large power projects seeking to connect to the Texas grid.

The delay clears the way for a monthslong audit that will determine which of hundreds of proposed data center projects are eligible to proceed under the state’s data center directives issued by Gov. Greg Abbott on Aug. 3 and June 10. The directives require data center projects under ERCOT’s consideration to lay out how they can pay for their own infrastructure costs or rely on state and local tax incentives, grants or other public financial assistance, how the projects would impact the state electric grid and how they handle water resources to reduce disruptions to the communities.

ERCOT plans to release two reports on Dec. 10: one confirming which projects actually qualify for Batch Zero and one covering the broader impact of both large and medium-sized data centers on local communities, followed by a public meeting on Dec. 17. Until then, every project in the pipeline remains on hold.

PUCT’s approval yesterday resolves three deadline extensions ERCOT was asking for on Aug. 10, after Gov. Abbott directed the commission and ERCOT on Aug. 3 to conduct a full verification process of data centers seeking to connect to the grid before more are allowed to proceed. At the Aug. 20 meeting, the commissioners said they were comfortable approving the extensions.

ERCOT is currently evaluating approximately 474 gigawatts of requests to connect to the Texas grid, which is “more than five times Texas’ record peak electricity demand for ERCOT,” adding that 90% of the new power requests are from data centers, according to Gov. Abbott’s Aug. 3 letter to the agency.

Since the beginning of the month, the Aug. 3 directive has been making waves in the market. DLA Piper warns that this is “an immediate development in interconnection and may inform future statutory regulation,” while Foley & Lardner urged stakeholders to “engage now to advocate for a streamlined verification process.” Gibson Dunn promptly released an explainer following ERCOT’s Aug. 10 good-cause exception request, elucidating key impacts on data centers seeking to connect to the ERCOT grid. Holland & Knight on Aug. 20, announced that its Austin-based Texas Government Advocacy Team has established the Texas Data Center Association, a trade association representing the data center industry before state lawmakers.

Earlier this week, Gov. Abbott announced that the Data Center Coalition, which includes members such as Powerhouse Data Centers, Crusoe, CoreWeave and Yondr Group, will comply with the guidelines established in the governor’s directives for data center buildout in the state.

The Batch Zero

Batch Zero is ERCOT’s name for the first, one-time review of a huge backlog of requests from data centers and other large power users – those needing 75 MW or more – that want to connect to the Texas grid. Instead of reviewing each request one at a time, Batch Zero studies them together to figure out how much of that demand the grid can actually handle and what new power lines or substations would be needed.

The three deadline extensions PUCT approved on Aug. 20 were:
 

1. ERCOT will now have until Aug. 31, instead of Aug. 7, to tell each project whether it qualifies as a base load (the most advanced category, subject to the fullest set of eligibility requirements), a studied load (a lesser category still included in the technical study), or does not qualify at all. Projects that are downgraded from base load will have a short window to dispute the decision or adjust their financial deposit. ERCOT said this delay does not change a separate, later deadline, currently April 9, 2027, for finishing the full technical study, but the agency acknowledged it will likely not meet that date either and will address a new timeline later.
    
2. ERCOT can now include projects it has provisionally, but not finally, approved in two upcoming grid stability checks: one that already took place on Aug. 1 and one due Nov. 1. These quarterly stability assessment checks help ERCOT confirm the grid will stay stable as new large users come online, but being included in a stability check does not mean a project is approved to actually start drawing power, as the approval still requires the final review.
    
3. ERCOT can take more time to review technical data, called dynamic models, that developers submitted by a July 10 deadline. The agency said it received about 290 of these submissions and found problems with a significant number of them, and needs more time to work with developers.

A summary of the three good-cause exceptions approved by ERCOT on Aug. 20 is set forth below: