Post: Finding solid ground in ERCOT

Finding solid ground in ERCOT

We receive many requests from developers every week regarding our revenue floor plus bid optimization offerings in ERCOT.

In this article GridBeyond Director – FTM sales Jessica Greene, shares some of her thoughts to help project developers know more about securing a floor for the project revenues, whether one wants to derisk their balance sheet, or to alleviate the concerns of project financiers.

What we’re seeing

The ERCOT market has continued to evolve over the past quarter as insurance and commodity providers reassess their exposure to long-term revenue floor structures. Most have tightened underwriting standards or stepped back entirely.

This shift has left GridBeyond working with a smaller group of highly rated, insurance-backed providers that now serve as a main source of creditworthy revenue protection for storage projects seeking financing.

Conservative assumptions are now the norm. Floor pricing continues to reflect updated views on energy spreads and ancillary revenue potential, leading to tighter but more sustainable structures designed to weather the less profitable periods seen in recent quarters

Insurers are stress-testing fundamentals. Underwriters are prioritizing downside resilience, proven operational track records, and data transparency, all of which GridBeyond provides. Our partners have pre-vetted our end-to-end optimization platform, reducing diligence timelines

Lenders are prioritizing balance sheet–backed capital that supports long-term stability and predictable debt coverage

Investors are focusing on credit quality and durability, favoring institutional-grade protection

GridBeyond’s current offering

With the exit of previously available options through our partners, GridBeyond now works with a select field of institutional-grade, insurance-backed providers. These options deliver stable, bankable revenue coverage in ERCOT, in line with what the market and lenders now demand.

Key benefits:

• Guaranteed minimum revenues under predefined price scenarios
• Investment-grade credit quality recognized in project finance models
• Clear, transparent structure for long-term financing
• Protection against prolonged downturns and revenue compression

Indicative pricing

While overall pricing has normalized at more conservative levels compared to last year, insured floor products remain competitively positioned relative to risk-adjusted ERCOT returns.

Indicative market ranges (subject to underwriting and project specifics, assuming GridBeyond optimization):

• Coverage: ~$45–$50/kW-year, based on project location and term
• Upside Sharing: 80/20 or 75/25 splits in favor of the project sponsor
• Term: 5–7 years, with optional extensions or repricing tied to project performance

While some market participants continue to offer traditional tolling structures, often at more competitive prices and longer terms of up to ten years, these are often not considered bankable under current lender criteria due to counterparty credit risk or weak balance sheets.

Some lenders may accept credit swaps or a credit enhancement policy where an insurer or guarantor stands behind the payment obligations of a lower-rated or unrated offtaker. However, it’s important to weigh the following:

• Credit insurance premiums can be significant, especially for long-term BESS contracts
• Some swaps only cover specific default events or payment shortfalls—not performance risk
• The insurer must underwrite the underlying contract and counterparty, which can delay closing
• Bankability now depends on the insurer’s rating and financial strength

In contrast, GridBeyond’s insured floors address these challenges directly. Our solutions are already credit-enhanced, independently rated, and fully aligned with institutional underwriting standards. This provides lenders with the assurance they require, while supporting flexibility and long-term investor confidence.

Looking ahead

As traditional toll providers face increasing credit scrutiny, insurance-backed revenue floors are setting the new standard for financing certainty in ERCOT.

By combining investment-grade credit, transparent structure, and predictable coverage, GridBeyond and its partners bridge the gap left by hedge funds, commodity, and non-bankable toll providers, delivering institutional-grade revenue protection when it’s needed most.

If you have any questions about GridBeyond’s insurance-backed revenue floor solutions, or if you’d like to discuss how our Bid Optimizer can support your next project, please reach out, we’re here to help.