GRID 101: ERCOT vs PJM — Two Markets, Two Playbooks

For large loads such as Bitcoin mines and AI data centers, understanding how each grid compensates power generation is critical. The structure of the market determines how prices behave, how volatility appears, and how much value your flexibility can create.

What Is ERCOT

The Electric Reliability Council of Texas (ERCOT) operates an energy-only market. In this system, generators are paid only for the energy they produce and deliver to the grid, measured in megawatt-hours (MWh), at the Locational Marginal Price (LMP). There are no separate payments for simply being ready to generate power.

This creates a market that is driven purely by supply and demand. When generation is scarce, prices rise to signal the need for more power or for large consumers to curtail. When supply exceeds demand, prices fall, sometimes turning negative when renewable generation is high.

During mid-day hours in Texas, solar output often peaks while demand remains moderate, especially outside of summer months. The combination of strong solar generation and lower load can push the system into oversupply, forcing prices down sharply. In some intervals, generators effectively pay to stay online because shutting down and restarting would be more costly.

For large flexible loads, this pattern creates a window of opportunity: when solar generation floods the grid and prices dip toward zero or negative, curtailment systems can shift from standby to high-performance operation, consuming low-cost power while supporting grid stability.

‍

‍

‍

What It Means for Flexible Loads

This volatility creates opportunity.

Flexible loads with strong telemetry and automated control systems can curtail when prices spike and adjust power to high performance when prices drop.
Doing so improves site profitability and supports the grid by reducing stress during critical hours.

For example, during a 2024 heat wave in Texas, real-time prices for a short interval approached $1,600/MWh, demonstrating how exposed large loads can be during peak demand periods. Flexible loads that curtail during those intervals avoid extreme cost exposure and contribute to grid stability.

‍

What Is PJM

PJM Interconnection, which covers parts of the Midwest and Eastern United States, operates both an Energy Market and a Capacity Market.

• The Energy Market functions like ERCOT’s, paying generators for each MWh of electricity they produce and deliver at market prices.
• The Capacity Market adds another layer. It pays resources, including generators and some large loads, for committing to be available during future periods (typically one to three years ahead).

This capacity structure creates greater price stability. Because generators earn money for being available, energy prices don’t need to rise as sharply to attract supply. That means fewer extreme price events but also fewer near-term opportunities for loads to capture value from rapid flexibility.

‍

What It Means for Flexible Loads

In PJM, flexible loads can participate in Demand Response and Capacity programs.
These require longer-term commitments and verification but can generate steady, contract-based revenue for reducing demand during system peaks.
Where ERCOT rewards fast, dynamic behaviour, PJM rewards predictable, dependable availability.

‍

Why It Matters

Knowing which market you operate in shapes how you design your strategy.

• In ERCOT, flexible loads benefit most from real-time automation, energy analytics, and intelligent curtailment logic.
• In PJM, success comes from planning, reliability commitments, and consistent performance.

At LōD, we allow flexible loads to thrive in both environments by integrating real-time market signals, on-site controls, and automation logic so data centers and miners can operate as intelligent energy participants, not passive consumers.

‍

Next in Grid 101

Both ERCOT and PJM operate Day-Ahead and Real-Time markets that determine how energy prices are set.
In the next Grid 101, we’ll break down how those markets work and how flexible loads can plan around each to optimize energy strategy.