Build Better Energy Budgets: Lessons from 2025 Energy Markets and How to Plan Smarter in 2026

Introductions  

Sam Cotterall: Welcome to Build Better Energy Budgets. We’re going to start with a 2025 energy markets recap, build on what happened in 2024, and think about how both years can inform our approach to 2026 energy budget planning. We also have a great guest joining us today — Peter Serian — who will walk us through some case studies later in the session.  

Sam Cotterall: I’m Sam Cotterall, Director of Client Enablement at Verse. I sit between the market and the product — listening to prospects and clients, and drawing on my experience working with dozens of corporate energy buyers to help shape the direction of our platform.  

Shehzad Wadalawala: I’m Shehzad Wadalawala, VP of Strategy at Verse. I track industry trends, markets, and policy, and identify the key factors that should influence our product, our customer experience, and the analytics we build to support our customers’ energy program goals.  

Peter Serian: I’m Peter Serian, Director of Energy Management Solutions. I work on the front end of our customer lifecycle — technical solutioning, matching use cases to technology. I’ll be joining later in the discussion for the case study section.  

2025 Energy Markets Recap  

Sam Cotterall: Let’s start with energy markets at the hub level. Natural gas is the obvious starting point since it’s the primary driver of power prices. 2024 was a depressed year for gas — prices floated around $2 with a couple of spikes. Gas prices were meaningfully higher in 2025, and since gas remains the marginal generator in U.S. power markets, that had a direct impact on hub-level prices — the prices at which most PPAs settle.  

Sam Cotterall: We have not seen a decoupling of gas and power in the U.S. the way we have in high renewable penetration markets like Spain. We still have relatively cheap gas and lower renewable penetration. There was notable month-to-month volatility that outpaced expectations and likely destabilized some energy budgets. Liquefaction and LNG dynamics will also be worth watching heading into 2026 as new export capacity comes online.  

Sam Cotterall: Looking at regional power prices — PJM, ERCOT, and SPP — the correlation with natural gas was clear. In rapid load growth markets like PJM and ERCOT, 2025 prices were noticeably above 2024. These fundamentals matter and they move, which reinforces why we need to track them dynamically as we think about short-term PPA settlement impacts.  

Policy Update: The One Big Beautiful Bill  

Shehzad Wadalawala: The One Big Beautiful Bill, passed in July 2025, was the landmark policy event of the year. In short, it accelerates the phase-out of tax credits for solar and wind while continuing credits for storage, nuclear, and other clean firm capacity into the 2030s.  

Shehzad Wadalawala: The key restriction: to qualify for remaining solar and wind tax credits, developers must begin physical construction prior to mid-2026. That’s driving a significant pull-forward of PPA contracting activity, as developers need signed contracts to hit that construction start date. Prices are rising as a result — any project that’s eligible and on timeline is in high demand.  

Shehzad Wadalawala: There’s also a new Foreign Entity of Concern provision. Projects with supply chains tied to countries like China or Russia — which affects solar panels and some battery storage components — face additional qualification hurdles.  

Shehzad Wadalawala: Even before the bill passed, investors were already shifting capital away from U.S. wind and solar given the policy trajectory. Global renewable investment continues to grow — the EU, China, and the rest of the world are still accelerating — but the U.S. is seeing a relative slowdown. Meanwhile, nuclear, battery storage, and natural gas are the biggest domestic winners under this new policy environment. Existing plants planned for retirement are staying online longer, and we’re seeing an uptick in planned natural gas capacity as well.  

Corporate PPA Market Activity  

Sam Cotterall: Our friends at SEIA track corporate PPA announcements. Full-year 2024 saw 21.7 gigawatts of new corporate capacity contracted, bringing the cumulative total past 100 gigawatts since 2014. As of September 2025, corporates had already contracted 20.4 gigawatts — with a full quarter still to go. We’ll almost certainly surpass 2024 and likely set a new annual record. A significant portion of that activity is tied to developers locking in contracts before the construction start deadline to qualify for remaining tax credits.  

How Is Your 2025 Energy Budget Landing? (Audience Poll)  

Sam Cotterall: We asked attendees managing renewable energy contracts: how did your 2025 energy budget land? The responses showed a range — a few had it dialed in closely, most were somewhat over or under, and a handful were significantly off — a clear sign that energy budget accuracy varies widely. That range of outcomes speaks directly to the variability in how an energy budget gets built and what assumptions go into it — which is exactly what every energy budget exercise should address. 

Understanding PPA Energy Budget Uncertainty 

Shehzad Wadalawala: Before we get into what Verse does differently, it helps to understand the sources of uncertainty in a PPA energy budget. There are four main drivers.  

Shehzad Wadalawala: First, market prices. As Sam covered, power prices are driven by supply and demand fundamentals — renewable build-out, load growth, natural gas prices. These move more than people expect year over year, and they’re the primary reason an energy budget can go sideways. 

Shehzad Wadalawala: Second, shape — the relative value of hours when a renewable resource is generating versus the around-the-clock average. In high solar penetration markets like California, the duck curve means midday generation is less valuable than it used to be. The shape of your asset’s generation relative to market prices matters.  

Shehzad Wadalawala: Third, basis — the difference between the hub price where a PPA settles and the local node where the asset actually participates in the wholesale market. Depending on commercial structure, this risk is carried by the buyer, the seller, or shared.  

Shehzad Wadalawala: Fourth, generation volume — weather-driven variability in how much a wind or solar asset actually produces in a given period.  

Shehzad Wadalawala: Factors that can push PPA revenue lower include: economic slowdown reducing demand, lower natural gas prices bringing down the clearing price, increased renewable generation in the same hours causing price cannibalization, and mild weather reducing peak demand. On the upside: strong economic growth, high natural gas prices, policy changes that tighten supply, interconnection delays limiting new capacity, and extreme weather.  

Load Growth: The Unprecedented Forecast  

Shehzad Wadalawala: ERCOT released a load forecast earlier this year that was unlike anything I’ve seen in my career in energy. After decades of essentially flat electricity demand across much of the country, we’re now looking at a trajectory that resembles the beginning of a roller coaster climb. This is driven by data centers, industrial electrification, and AI-related load growth.  

Shehzad Wadalawala: One nuance worth highlighting: data center load tends to be flatter and around-the-clock, unlike traditional peak load that concentrates in the middle of the day. That actually improves utilization of existing infrastructure even as it increases total demand.  

Sam Cotterall: Looking at ERCOT futures for 2027 and 2028 — the peak demand months saw price increases of 27–29% just in the futures market. Part of that reflects genuine supply-demand concern; part reflects the asymmetric risk premium that traders demand when the upside scenario involves $5,000/MWh price spikes. Either way, the market is already repricing around this new demand reality.  

What to Watch in 2026  

Sam Cotterall: For 2026 planning, there are four things we’re closely tracking.  

Sam Cotterall: Load growth: The data center and AI demand story is real, and the timeline is compressed. Assets contracting today will be operating in the market shaped by this growth. We’re watching how load growth assumptions evolve across ISOs.  

Sam Cotterall: LNG export capacity: Several new liquefaction facilities are scheduled to come online in the next 12 months, which could nearly double U.S. export capacity. If those timelines hold, it puts upward pressure on domestic natural gas prices.  

Sam Cotterall: Utility rate and tariff redesigns: Utilities are reworking tariff structures to manage the cost of serving large, high-volatility customers like data centers. Changes may include higher coincident peak charges, restructured demand charge formulas, minimum bill obligations, and longer-term service contracts. These shifts matter not just for these new large loads, but for all commercial and industrial customers’ retail electricity costs.  

Sam Cotterall: Grid-scale battery storage: Batteries are the fastest-growing asset class in the U.S. grid and are starting to materially affect price formation. They can dampen peaks by shifting renewable generation to high-demand hours — but they also change midday pricing dynamics by absorbing surplus that previously caused curtailment. This affects PPA settlement values in ways that are important to model.  

Shehzad Wadalawala: On batteries and load growth together: utilities aren’t built for this pace of change. Batteries play a key role in solving localized transmission constraints that would otherwise bottleneck new large load connections. It’s not just about integrating more renewables — it’s about maintaining grid reliability for existing customers while accommodating rapid new demand.  

The Industry Standard vs. the Verse Approach to PPA Budgeting  

Sam Cotterall: The standard industry methodology for renewable PPA budgeting typically works like this: take a developer-provided 8,760-hour generation profile based on long-term weather averages, pair it with a fundamental power price forecast designed for 15-year NPV analysis, and multiply price by volume to get a revenue estimate. That’s the energy budget. 

Sam Cotterall: The problem is that a forecast designed for long-term investment decisions uses smooth assumptions that don’t reflect near-term market dynamics. It’s not going to capture what natural gas is doing this quarter, what the futures curve looks like for the next 12 months, or how a recent weather pattern has affected generation at a specific asset. An energy budget built on that foundation will consistently disappoint. 

Sam Cotterall: What Verse does differently: we update our assumed generation profile monthly using a machine learning model that incorporates the actual recent performance of each asset. We pair that with a separate ML model for near-term pricing that blends in weather, supply and demand trends, natural gas futures, and forward curves. Critically, we also model the relationship between resource availability and local market prices — so if wind generation in a region is high, we account for the downward price pressure that creates, rather than running a simple price-times-quantity calculation. The result is an energy budget that reflects where the market actually is, not where it was six months ago. 

Case Study Results: Two Wind Assets in 2025  

Peter Serian: As part of a project our team worked on this year, we wanted to stress-test Verse’s forecast model against real-world outcomes. We onboarded a client at the end of 2024, loaded their historical PPA data, and produced a 2025 forecast. We then tracked actuals throughout the year to see how that forecast held up against both the industry standard approach and real performance.  

Peter Serian: Why does this matter for corporate energy buyers and sustainability leaders? PPAs aren’t just sustainability instruments — they’re financial contracts. Net PPA spend can represent 15–50% or more of an organization’s annual electricity budget — making it one of the largest line items in any energy budget. And the most common pain point we hear from clients once electrons start flowing post-COD is energy budget inaccuracy. When a budget is 50–100% off, it doesn’t just create a cash flow problem — it can damage the credibility of the energy and sustainability team with finance leadership and put future energy budget requests at risk, and make future renewable procurement harder to justify.  

Peter Serian: Asset 1 — Generation: Both the Verse and industry standard 8,760 approach tracked the actual generation shape reasonably well. March was an outlier with higher-than-average generation, but overall the generation profiles were similar. Verse came in within 4.5% of cumulative actual generation year-to-date. The industry standard was 14% off — not catastrophic, but a meaningful gap.  

Peter Serian: Asset 1 — Net Spend: This is where the approaches diverge significantly. The industry standard forecast assumed market prices would consistently stay above the PPA strike price, projecting positive settlements — meaning the client would receive checks each month. Verse’s short-term, futures-based approach indicated that market prices were more likely to sit below the strike price, meaning the client would be paying the developer. The actual results aligned with Verse’s view. Cumulatively through October, the industry standard approach was over 100% off on net spend. Verse was approximately 5.4% off.  

Peter Serian: Asset 2 presents a different dynamic. Wind generation in the March–April period — typically the most volatile time of year for wind assets — was actually below both the 2024 and 10-year historical average. That’s the opposite of Asset 1.  

Peter Serian: On generation, Verse was essentially spot-on. The industry standard 8,760 approach was 11% off — acceptable, though not perfect.  

Peter Serian: On net spend, the industry standard approach was coarse and poorly shaped, missing the monthly variation in actual performance. Verse tracked the shape reasonably well, with the main miss being April, where actual net spend was better than forecasted — a miss in the favorable direction. Cumulative net spend: Verse was within 17% of actuals. The industry standard was approximately 50% off.  

Sam Cotterall: To put that in energy budget terms: through October, the combined net spend across both assets was $2.56 million. The industry standard approach would have pointed to a budget request of roughly $750,000 to $1 million. At that level, this client would have exhausted their energy budget by April. Verse’s forecast would have supported a budget request of approximately $3.5 million — leaving roughly $700,000 of energy budget remaining in October with two months still to go. That’s a defensible energy budget position versus an uncomfortable conversation with leadership. 

Sam Cotterall: Why was April different on Asset 2? Wind capacity factors were well below average — not just versus 2024 but versus the 10-year historical average. Natural gas prices were elevated, which pushed market prices higher. Cooler weather increased heating degree days and demand. The net effect was that actual net spend was lower than the energy budget forecast — meaning the client paid less than expected. That’s the better kind of miss, but it’s still a miss, and it’s important to understand and communicate the drivers behind it.  

Q&A Highlights  

Blake (Moderator): First question: In ERCOT, is peak summer demand during the day or at night?  

Shehzad Wadalawala: Great distinction to make. Gross load — total consumption — peaks during the middle of the day driven by cooling. Net load, which is gross load minus variable renewable output like solar and wind, now peaks in the evening as solar generation ramps down. California introduced the concept of net load with the duck curve, and ERCOT is increasingly experiencing the same dynamic. So for grid operators, the most challenging period is increasingly the evening transition, not peak midday.  

Blake (Moderator): Second question: With Verse’s more frequent updates, how do you avoid chasing noise in the forecast?  

Sam Cotterall: There’s an important distinction between structural market shifts and short-term noise. Our recalibration is designed to respond to persistent changes — load growth trends, gas price trajectories, forward curve movements — not single-day spikes or anomalies like a winter storm. The goal is to align with where the market is actually going structurally, not to be hyper-reactive.  

Shehzad Wadalawala: We also look closely at explanatory variables for each asset. If a transmission outage caused a resource not to generate, that gets treated differently in our models than a weather-driven generation shortfall. Understanding what actually happened prevents us from anchoring future forecasts on anomalies.  

Blake (Moderator): Final question: What’s the best way to communicate PPA energy budget risk to finance leadership?  

Shehzad Wadalawala: The key is being able to unpack the assumptions behind your numbers. A forecast is only as good as the information available at the time it was made, and an energy budget is only as strong as the forecast behind it. If natural gas prices moved significantly, that’s a story finance can understand — it happened across the market, not just in your portfolio. If wind was below average at a specific asset, you can point to the ISO’s own reporting showing that every wind asset in the region underperformed. When you can tie your energy budget variance to objective, external market factors, you maintain credibility even when the numbers are off.  

Sam Cotterall: Put it this way: the energy manager who worked with Verse had an energy budget that was well-funded through October with room to spare. The energy manager using the industry standard approach ran out of budget in April and had to go back to finance twice. The conversation you want to be having is ‘we built a solid energy budget and here’s how we’re tracking’ — not ‘our energy budget was off by 100% and we need more money.’ The goal is to build and maintain energy budget credibility with your finance partners, so the renewable program continues to grow.  

Closing  

Sam Cotterall: Thank you everyone for joining today. This recording will be available on our website within 24 hours. If you have questions we didn’t get to, please reach out directly through the website. Happy holidays.  

Shehzad Wadalawala: Happy holidays, everyone.  

Peter Serian: Happy holidays. Great to be here.