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Tom Heintzman: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape. I’m your host, Tom Heintzman. Please join me as we explore today’s most pressing issues with special guests that will give you some new perspectives and help you make sense of what really matters.

Pull Quote (Geoff Bailey): So I think the scale of the load looking to interconnect to our transmission system are far greater than they ever have been, which presents transmission planning challenges. It presents generation challenges. It presents a lot of challenges that the ERCOT system and transmission distribution service providers like Oncor are trying to work through right now.

Tom Heintzman: Welcome to our multi-part series on the role of electrification in the transition to clean energy. The series highlights the trends and market developments impacting the electrification value chain. Over our last several episodes, we’ve focused on a number of interrelated challenges and solutions facing the electricity grid. This includes the increasing numbers of large interconnection applications, in large part driven by data center developers seeking to connect to the grid, which are challenging the traditional interconnection process. We’ve also covered challenges utilities are facing in terms of procuring enough electricity and capacity to meet the demand, and the increasing role of renewable energy, given its low cost and relatively short development and construction timelines. As well, we’ve touched on some potential solutions to this rapidly increasing demand and the strain that’s placing in the transmission and distribution systems, notably demand response and storage. Today, we will explore one particular utility where many of these dynamics are playing out in real time and at scale. Oncor is the largest regulated utility in Texas, serving about 400 cities and towns across the state. Oncor is located in ERCOT territory. ERCOT is the market operator of one of the electricity regions in the United States. We covered PJM in a prior episode, and it is notable for a number of reasons, including the explosion of demand occurring as a result of data centers, the introduction of new interconnection policies in order to deal with this onslaught of demand, as well as the massive growth in renewable energy and battery storage. To help us explore what’s going on at Oncor and ERCOT in Texas, I’m very pleased to welcome Geoffrey Bailey to the show. Geoff is the vice president of corporate strategy and chief of staff to the CEO at Oncor Electric Delivery. Geoff, welcome to the show.

Geoff Bailey: Thank you. Tom, thank you for having me.

Tom Heintzman: So, Geoff, we have a largely Canadian audience, although I don’t think exclusively. Let’s start with who the players are in Texas. Can you describe for our listeners Oncor’s business and how it interfaces with the regional market operator, ERCOT?

Geoff Bailey: Yeah, I could absolutely do that. So Oncor is a transmission and distribution service provider here in ERCOT. ERCOT stands for the Electric Reliability Council of Texas. They are the market operators. The ISO, which you indicated. ERCOT covers about 85% of the state of Texas geographically. Taking a quick step back. Back in 2001, then Governor George W Bush signed SB-7, Senate Bill seven, into law, which deregulated the ERCOT market. Prior to 2001, ERCOT had vertically integrated markets where power generation, transmission, distribution, and retail power was all housed under one company. Today, after deregulation, power generation, transmission and distribution service providers like Oncor and then retail electric providers or reps are all now three separate companies here in the deregulated market in ERCOT. Oncor is the midstream provider, the transmission and distribution service provider. We are, as you said, the largest utility in Texas. We are the largest pure play wires company in America. We serve about 14 million Texans across the state. Year end 2025 had about $32 billion in rate base, $1 billion in earnings, about 145,000 miles of transmission and distribution lines. Fun fact for your listeners, that is enough miles of line in the air to circle the globe about five and a half times. We have a distribution service territory that is 54,000mi². One more fun fact. Another thing that’s 54,000mi² is the entire state of New York. So we service that distribution service territory the same size as the state of New York, with about 5500 dedicated employees. So it is our responsibility to build, operate and maintain the electric grid for about 40% of the state of Texas geographically.

Tom Heintzman: And just to give our listeners some context, I think I’m right in saying you can correct me, but Oncor has peak capacity of about 30,000MW, and that’s roughly the same as Ontario.

Geoff Bailey: The Oncor transmission system peaks about 33GW.

Tom Heintzman: Okay, so now let’s turn to the growth in the demand. There’s an incredible amount of demand seeking to connect to the grid, in ERCOT, and in Oncor’s territory in particular. Can you quantify that for our listeners? How much demand is looking to join? What’s driving this increase, and what are the big types of demand that are joining? Obviously data centers, but is there anything else that’s worth mentioning?

Geoff Bailey: Yeah, 100%. I mean, a good summary is just to say all the demand, you know, just to encapsulate it that way. But at the end of Q2 of 2026, Oncor had an LC&I or large commercial and industrial queue of 298GW on a 33GW peak transmission system. Now, let’s break that down a little bit. And my team looks at this pretty frequently. Oncor, has the most robust data center pipeline of any utility around the globe. And then Oncor also has the most robust non-utility LC&I, large commercial and industrial queue, of any utility in America. So of that 298GW, 282GW are just data centers alone. To quantify that a little bit a megawatt here in ERCOT is somewhere between 200 and 250 Texas homes at peak. So that 282GW is represents somewhere just south of 71 million Texas size homes looking to interconnect to the Oncor transmission system. And then you’ve got 16 or 17GW there of non-data center large commercial industrial load. Now that’s your wafer manufacturing your ethane crackers, your heavy industrial manufacturing. You’ve got oil and gas loads in there. You’ve got residential loads in there. And then obviously we still have some crypto mining loads that looking to interconnect mainly in West Texas, but and also other parts of the state.

Tom Heintzman: And Geoff, how much of that is real? You know, companies and data centers put in applications in multiple places. Did you did you any I don’t know, sensitivity testing to know how much of that is really likely to be constructed versus just signing up for the queue?

Geoff Bailey: Yeah. So we are the first to say there’s no way in the world that 282GW of data center load actually materializes. As a matter of fact, Texas Governor Greg Abbott here last week came out and announced that he is seeking an audit of data center loads that are looking to interconnect to the ERCOT system. That audit consists of how many of these data centers have closed loop water systems? How many of these data centers are bringing their own generation? How many of these data centers are taking advantage of local tax incentives? Because as a state, he no longer wants data centers to be eligible for local property tax incentives. And then you know, how many of these data centers are paying their own way in terms of not only the full load generation costs, but the full load grid interconnection costs as well? That is an audit that is being conducted by the state of Texas and ERCOT right now, and we hope to get more information on what that timeline looks like. But I think when that audit shakes out, it will be very interesting to see what loads still materialize. I can tell you this in terms of how much of that load is real. We talk to these data centers all the time. We talked to large commercial industrial customers all the time. And, you know, the overwhelming majority of the folks that we speak with have cite control, have funding, have full load ramp plans ahead of them. And so there’s several different transmission planning processes. We certainly do not have to go into each one. I will spare your audience that. But there is the 2026 Regional Transmission Plan, or RTP. We submitted 122GW load to that planning process. In terms of load, that met some of the most stringent criteria that ERCOT has established from a transmission planning process. So I think that tells you how many of those customers actually meet those criteria. It’s significant. And then we’ve got this batch process, batch zero transmission planning process, which we can get to. We actually believe that we’ve got 44GW that will be eligible for transmission interconnect as a part of ERCOT batch zero process. Let me just give you another data point that I think is incredibly interesting for listeners, because I think a lot of people hear about this data center conversation. They said, well, data centers have been around for decades, and to some extent that is true. But I will tell you, the hyperscalers data center conversation is relatively recent. Call it here in the past, you know, kind of 30 to 36 months, if you will, because the size of the loads and the scale of the loads looking to interconnect now are far greater than they ever have been. So quick data point on that. Historically, a data center and average data center at Oncor is somewhere between right around 100MW. Today, the average data center at Oncor is somewhere around 700MW.

Tom Heintzman: Oh my God

Geoff Bailey: The peak demand for the city of Fort Worth, Texas, one of the larger and most well-known cities in the entire state of Texas, is 3000MW, or three gigawatts. So you can see in just a small handful of average data center customers, I get to the entire peak demand of the city of Fort Worth. So I think the scale of the load looking to interconnect to our transmission system are far greater than they ever have been, which presents transmission planning challenges. It presents generation challenges. It presents a lot of challenges that the ERCOT system and transmission distribution service providers like Oncor are trying to work through right now.

Tom Heintzman: That’s fascinating, Geoff, I want to get to supply. But one last question on demand before we move on. A few episodes ago, we had a long discussion about interconnection queues and processes to reconcile transmission planning done over long periods of time for large volumes versus the actual interconnection, which is usually done on a one by one basis. Texas implemented the batch zero process, and you mentioned it a few moments ago, and then it was impacted last week by the governor’s proclamation, for lack of a better word. Maybe you can just give our listeners a sense of what batch zero was, what it was intended to accomplish, and maybe where it stands right now.

Geoff Bailey: Yeah. You bet. So back in early 2025, ERCOT stood up a new transmission planning process called the batch process. And this is more from a transmission interconnection study process. The batch process really is intended to deal with these large loads that we just talked about, because I think the challenge from a transmission planning process is the size of these loads. It’s very difficult to do individual one off transmission planning studies like we have previously. When you’re talking about loads, that can be a gigawatt, two gigawatts, three gigawatts for the same singular facility. And you have multiple facilities like that in the same region, potentially off the same 345 line. It can be incredibly challenging from a system resiliency system reliability standpoint. So what ERCOT did was they said, hey, we’re going to do away with these individual transmission planning processes, and we’re going to put them all together and study them collectively in one singular batch process. And that’s become the batch zero process. And that process really consists of two phases, the batch zero interconnection study, which will allocate megawatts and preliminarily identify transmission upgrades necessary to reliably serve those assessed large loads. And then you’ve got the refinement study, which finalizes the transmission upgrades required to serve those committed large loads. Governor Abbott announced his data center audit that ERCOT and the state of Texas are conducting right now. In response to that, ERCOT announced later that afternoon that they have paused the batch zero transmission planning process. So right now we are assessing when that process will commence once again. And there have been several open meetings at the Public Utility Commission of Texas, as well as a House State Affairs Committee hearing, that we should start to see some real conversation about the pathway forward for batch zero.

Tom Heintzman: Wow. Interesting. Okay. So let’s turn now to supply and to generation. ERCOT has been a leader in renewable energy. Can you give our listeners a sense of the mix of both the installed generation in either Oncor or ERCOT, and also the connection queue, so those generation sources that are looking to connect to the grid, what does that look like and what does it tell us about where supply is headed in terms of the types of supply wind, solar, gas, etc.?

Geoff Bailey: You bet. So let’s just take one step back that I think it’s really important for your listeners to understand. When people think of Texas, people think of oil and gas. Texas is an oil and gas state. We are proud to be an oil and gas state. Texas will always be an oil and gas state. However, at the same time, Texas is the 800 pound gorilla in renewable electricity generation in the United States. We generate more renewable electricity than the next several states combined, and I don’t think Texas gets enough credit for that. So if you look at the current generation mix in ERCOT, you got 38% roughly that’s natural gas, around 25% that’s wind, 20% that’s solar, 3% that is nuclear. You still have 7.5% that is coal, that it’s phasing its way out as it ages out of the generation mix. And then you have almost 9% of the megawatts in ERCOT that is with battery storage. That’s the current mix. When you look at the generation queue at ERCOT, as of the end of the second quarter of 2026, that’s currently under study right now, you’ve got 463GW or 463,000MW of generation that is under study. And of that 85, 86% is mainly utility scale solar, storage, some wind power. And then you’ve got 15, 16% of that queue that is gas that’s currently under study. Now, historically, again, these are really big numbers. Historically around a third of that generation will actually make and come to market. But that just kind of gives you an idea of some of the size and scale and then overwhelmingly tilted towards utility scale solar and storage.

Tom Heintzman: It is amazing. Texas is a very big laboratory for the energy world, both on the demand side, what’s going on there and on the supply side. You’re already at – by the numbers you gave – about 43% renewable between solar and wind. And often here in Canada we talk about 20% or 25% being thresholds at which the variability is difficult for the market operator to manage. And yet, you know, you guys seem to be forging ahead, admittedly with the help of storage and of the gas deferment out. But it is very impressive. So what’s driving the massive growth in renewables and battery storage?

Geoff Bailey: So there’s a couple of things. Obviously when you put together kind of the three legs of the growth stool here in ERCOT, you’ve got demand growth, you’ve got geography and you’ve got policy. And so let’s just kind of take each one of those. You’ve got demand growth, which we clearly articulated both from a large commercial and industrial demand side that not only at Oncor, but in ERCOT with the batch study process that we just talked about. But you’ve also got population growth, mainly along the I-35 corridor, the Texas Triangle. For your listeners that may not be familiar with Texas, they call it the Texas Triangle from the DFB metroplex in north central Texas, down I-35 south to Austin and San Antonio, then east across to Houston and then back up to DFW. And you’ve got somewhere between, you know, 83, 85% of the Texas population that is either inside or near that Texas triangle. So you’ve got population growth. Texas grows by 1100 people a day. The DFW metroplex, where Oncor is headquartered, where I currently am now, grows by 400 people a day. So you’ve got demand growth on the large commercial and industrial side. You’ve got residential customer growth. Oncor, sees a long term premise growth rate about 2%. When you see utilities in the United States see premise growth somewhere around 70 to 80 bps a year. So we are certainly more than double that growth rate most years. So I’ve got demand side and then I’ve got geography. When you look at the Texas panhandle, has some of the highest sustained wind speeds of any geography on the planet. And then when you look at West Texas, where the Permian and Delaware basins are for, you know, all the way out to El Paso, but, you know, Midland and Odessa, inside the Oncor service territory, you see daylight exposure of, of 300 plus days a year. So you’ve got geography that is perfect for both utility scale solar and utility scale wind projects and the in Texas geography. So I’ve got demand growth, I’ve got geography. And then the third leg of that stool, which people can certainly feel different ways about. You have policy and you have the Federal Power Act that was signed by Bush 41 back in the early 1990s, which established the PTC and the ITC, the production tax credit and the investment tax credit. Both of those tax credits materially impact the cost of renewable projects. PTC, mainly on wind, and then the ITC, mainly on utility scale solar and storage projects, which can defer at least in ERCOT a material portion of that overall project cost, making the economics incredibly attractive for developers. So when you kind of put demand growth, geography and policy all together, it really helps to explain how Texas has been so popular with renewable generation growth as and then battery storage growth in particular.

Tom Heintzman: So, Geoff, I don’t want to leave the questioning without asking you about the other things that Oncor does in order to address the demand. You’re bringing on lots of new generation, but Oncor is also taking a number of innovative steps to get more juice out of the lemon to make its grid more efficient. Can you describe a few of these initiatives?

Geoff Bailey: Yeah, more than happy to. So currently I will just tell you this Oncor, when you look at the numbers, Oncor has built more transmission than any utility in America over the past several years. And then when you project out certainly through 2035 and 2040, so call it the next 10 to 15 years, we believe Oncor will build more transmission than any utility in America. Right now, the highest voltage transmission in ERCOT is 345 kV. It’s been 345 kV since sometime in the mid-1960s. Because of these large loads that we’re talking about, mainly oil and gas customers, but other large loads like wafer manufacturing, Oncor has had $50 billion of of wafer manufacturing cite in our service territory just in the past three years alone. So oil and gas, wafers, other heavy industrial manufacturing. We are now at an inflection point for the ERCOT market to where 345 kV can present some operational challenges. And so we are, for the first time beginning to build out 765 kV. It is going to be an integrated network, initially planning import pathways into the Permian and Delaware basins in West Texas that should be energized sometime around 2030 or shortly thereafter. That will, once it stood up, be the most sophisticated transmission system anywhere in the United States. And so that is something that we are currently building right now and working very hard at.

Tom Heintzman: So, Geoff, last question. We usually ask our guests to look at five years and tell us what they see. If you look at five years, what are the big changes you think will have occurred in Oncor and in ERCOT? How will it look different from today and what will be most noticeable?

Geoff Bailey: I think if you could use one word to kind of synthesize what the next 5 to 10 years in ERCOT and in Texas look like, I personally believe that word is opportunity. And as you said earlier, I think Texas and ERCOT in particular have proven to be the most robust energy market anywhere around the globe. The Permian and Delaware basins have allowed the United States to become the global swing producer in crude, prolific globally in crude oil and natural gas production. The renewable generation that we talked about, when I’ve got 40,000MW of nameplate wind capacity in ERCOT and then I’m, I’m hockey sticking my utility scale solar production, and then I’ve got these large loads that are looking to interconnect as well. So I think once we as a state determine the optimal pathway forward from a transmission planning process, from a transmission study process at the ERCOT level, we are going to build more infrastructure to support more growth than any energy market in the United States, one of the largest energy markets anywhere in the globe. And we will be a magnet for capital, for talent, and for continued growth across the state. Now we have to do everything we can as a state to continue to ensure Texas is open for business and to make sure that we continue to attract capital and businesses and people that want to move here. And I think people in Austin and across the state are absolutely on the same page about doing that. And I think once we get all of our ducks in a row, Texas will continue to be the premier energy market anywhere in the globe, and I think that’s what the future has in store for us.

Tom Heintzman: Well, Geoff, thanks so much for joining the show today. Your discussion brought together a number of themes that we’ve been exploring and painted it very graphically. And thank you to our listeners for tuning in.

Geoff Bailey: Thank you for having me.

Tom Heintzman: Please join us next time as we tackle some of sustainability’s biggest questions, providing you different perspectives to help you move forward. I’m your host, Tom Heintzman, and this is The Sustainability Agenda.

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Inside Oncor and ERCOT’s response to Texas’ surging power demand

Tom Heintzman

MD & Vice-Chair, Energy Transition & Sustainability

CIBC Capital Markets

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