The Texas (ERCOT) energy market is experiencing unprecedented volatility and upward pressure on prices. A influx of global and local factors – from international trade disputes to supply bottlenecks – has created a perfect storm in the energy sector, making now the critical time to secure your next electricity contract. We want to share the latest market data and risks so you can make an informed decision without delay.

Current Market Trends Driving Urgency

• Trade Wars & Supply Constraints: Global trade tensions are starting to push energy costs higher. For example, new U.S.–China tariff policies have prompted China to levy duties on U.S. energy exports, a move experts say could raise energy prices for U.S. customers . Closer to home, proposed tariffs on Mexican-made transformers (Texas imports nearly half of its large transformers from Mexico) threaten to raise infrastructure costs and delay grid upgrades   – a serious supply constraint in a fast-growing state. These trade-related disruptions add inflationary pressure to power prices and heighten the risk of future shortages.

• Surging Demand Outpacing Supply: Texas power demand is booming thanks to energy-hungry data centers, AI computing, crypto mining, manufacturing growth, and a rising population. Meanwhile, generation supply isn’t keeping up. In fact, ERCOT wholesale electricity prices have more than doubled – climbing from roughly $20 per MWh before 2020 to over $50 per MWh for forward contracts covering 2025–2028 . This jump is largely driven by concerns that power supply is not enough to meet the rapidly growing demand . Even the addition of huge solar and wind farms hasn’t solved the gap, since these intermittent resources can’t always produce power exactly when it’s needed . The bottom line: demand growth is outpacing supply, and prices are reacting accordingly.

• Wild Swings in Power Prices: Recent years have shown how volatile energy costs can be – but mostly on the high side. During Winter Storm Uri in 2021, ERCOT’s wholesale price spiked to the $9,000/MWh cap, a level so extreme it triggered billions in costs and prompted regulators to intervene . While there has been some short-term relief (for instance, a surge in solar and battery capacity cut peak summer prices from $332/MWh in 2023 to $80/MWh in 2024 ), such dips are the exception rather than the rule. Overall, the market trend has been rising prices with high volatility, and any temporary declines (often due to mild weather or one-time capacity gains) have been limited in scope. With ongoing supply chain issues and record-breaking demand, energy analysts agree there is far more risk of prices rising further than of falling in any meaningful way.

The Risk: Rates Likely to Rise – Limited Downside if They Fall

What does this mean for your business? In simple terms, the risk of waiting to renew your energy contract is much greater than the reward. Nearly all current indicators point to higher electricity rates in the coming months. Geopolitical factors like tariffs and trade wars are fueling cost increases rather than reductions, and Texas’s rapid growth is straining the power grid, which tends to drive prices up, not down. Even if market rates do dip slightly in the short term, those dips are projected to be modest and short-lived. There is only so much farther prices can fall, but there is no clear cap on how high they could climb if market dynamics worsen. Delaying action gambles with your budget: you might save a small amount if rates drop a bit, but you risk facing a much higher rate if you wait and markets surge.