Batteries cut Texas’ summer peak prices in half and pulled Pexapark’s Fair Values down, yet Pexapark’s Q3 sell-side polling results show 7-yr solar offers holding 43% above Fair Value.
On 23 October, an analysis by the Solar Energy Industries Association (SEIA), found that ERCOT’s average day-ahead price from June to August 2026 was 31.77 USD/MWh, 42% below the same months of 2021, even though load rose 30.1%. The peak hourly price fell from 110.96 USD/MWh to 57.30 USD/MWh, as solar output rose 421% and battery storage grew more than 26x to 33.1 GWh.
Pexapark’s Q3 2026 ERCOT Quarterly Market Report, published on 22 October, shows how flatter peaks lower contract values. Perfect TB2 (top-bottom 2-hour) Fair Value for a 7-yr contract starting in 2028 fell 29% between poll dates, from 8.22 to 5.85 USD/kW-month, with weaker evening peaks driving about 90% of the fall (1). Realized day-ahead TB2 spreads averaged 48.5 USD/MWh in Q3, 22% below Q3 2025, worth 2.95 USD/kW-month (1). We estimate that every 10 USD/MWh taken off the daily top-bottom spread removes ~0.6 USD/kW-month from a 2-hour battery (2). For solar, the same flattening deepened the shape discount by 6.80 USD/MWh, and 7-yr solar Fair Value fell 16% to 38.49 USD/MWh (1). ERCOT North 10-yr solar Fair Values moved from 39.78 USD/MWh on 16 October to 39.45 on 22 October (3).
Sellers did not follow values down: the median 7-yr solar offer held at 55.00 USD/MWh (2028 vs 2027 start), 43% above Fair Value against 20% in Q2, while buyers indicated roughly 30-40 USD/MWh (4). Fair Value now sits ~4 USD/MWh below the lowest offer.
We expect sellers to hold 2028-start offers into the Q4 Price Benchmark, as Section 232 polysilicon duties from 4 December and higher financing costs push costs up while Fair Values fall. The 2027 outlook supports the sellers’ bet on a spread recovery, but a fleet that still grows by several gigawatts a year will keep pressure on evening peaks, so we expect the premium to narrow only if offers fall rather than values rise.
Buyers should use the gap between offers and Fair Value to negotiate shape, negative-price and start-date terms, and compare 2-hour toll offers with TB2 Fair Values for the same start and tenor. Developers and IPPs should expect buyers to anchor on today’s lower Fair Values, and those who share the view that spreads will recover can keep that upside through short-tenor TB2s or partial tolls rather than long fixed contracts.
Notes
(1) Pexapark Q3 2026 ERCOT Quarterly Market Report, 22 October 2026. TB2 = top-bottom fixed-price financial agreement on the maximum theoretical daily day-ahead spread for a 2-hour battery, one cycle, perfect foresight, with no degradation, round-trip efficiency, intraday or ancillary revenue. ERCOT Composite, 7-yr, start 1 January 2028, change between poll dates 8 June and 21 September 2026. Solar: ERCOT Composite, 7-yr as-generated, start 1 January 2028, excluding balancing costs and including RECs.
(2) Illustrative estimate: 10 USD/MWh x 2 hours x 365 / 12 / 1,000 = 0.61 USD/kW-month. Realised Q3 day-ahead TB2: 48.5 x 2 x 365 / 12 / 1,000 = 2.95 USD/kW-month. Energy only; ancillary services and capacity excluded.
(3) Pexapark Fair Values (Quant API, internal). Solar: ERCOT North, 10-yr, start 1 January 2028, as-generated, excluding balancing costs and including RECs. BESS: ERCOT Composite TB2, 7-yr, start 1 January 2028, Persistent value including capacity (capacity is zero in ERCOT), USD/kW-month. Valuation dates 15 and 22 October 2026.
(4) Pexapark PPA Price Benchmark (Q3 2026 PPA Price Poll), valuation date 21 September 2026, as published in the Q3 2026 ERCOT Quarterly Market Report. Solar: as-generated, 7-yr, start 2028; QoQ compares the 2028 start with the 2027 start in Q2. Tolls and TB2: 2-hour, start 2028, USD/kW-month.
(5) Unless stated otherwise, PPA prices and Fair Values are 10-yr, as-generated, exclude balancing costs and include RECs, with no negative pricing adjustment.
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