📌 Texas Power Demand Doubling Reshapes Asset Valuations
The growth in Texas power demand is changing how power assets are valued. The market is focused not only on generation capacity, but also on who already owns deliverable capacity and at what price that capacity can be monetized.
ERCOT expects Texas power demand to double to 145 GW by 2031, with approximately 10 GW of new supply needed each year going forward. If this forecast is realized, power-generation assets that are already operational and connected to the grid have a more direct path to monetizing demand growth. VST’s advantage lies in the fact that its existing assets are already connected to the grid, so they do not first need to wait for project construction and grid interconnection to be completed. However, the demand forecast itself remains a prerequisite, and actual returns will also depend on whether new supply can keep pace and how power prices change.
The valuation of capacity under construction depends more heavily on pricing and execution. Taking IREN’s approximately 450 MW of capacity under construction as an example, JPMorgan estimates show that at a price of USD 10 per watt, the NPV is negative USD 6.2 billion; when the price rises to USD 15 per watt, the NPV increases to USD 2.6 billion. This difference shows that capacity scale does not equal certain value. The price per watt, construction progress, and grid-interconnection execution will all affect whether the project ultimately generates cash returns.
Therefore, the expansion of Texas power demand does not affect different assets in the same way. Assets already connected to the grid are closer to monetizing demand, with relatively more direct value transmission; projects under construction have greater potential returns, but also depend more heavily on pricing assumptions and delivery capabilities. Going forward, it will be necessary to verify the ERCOT forecast, the progress of the companies’ projects, and whether the relevant valuation assumptions can be realized.
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