Texas power prices soar as grid passes reliability test in heat wave

(Reuters) – Power prices soared in Texas this week as the state’s electric grid operator passed another reliability test after urging homes and businesses to conserve energy during a brutal heat wave for a second day in a row on Thursday.

The Electric Reliability Council of Texas (ERCOT), which operates the grid for more than 26 million customers, said it expected to have more power available on Friday than Thursday even though forecasts for hotter weather would boost demand on Friday.

Texas residents have worried about extreme weather since a deadly storm in February 2021 left millions without power, water and heat for days as ERCOT struggled to prevent a grid collapse after the closure of an unusually large amount of generation.

Earlier in the week, ERCOT warned that rotating outages were possible, but there were no power outages due in part to the grid operator’s efforts to increase supplies and reduce demand.

Real-time power prices, however, jumped to over $4,000 per megawatt hour (MWh) for more than an hour Thursday evening after hitting the grid’s $5,000 price cap for about an hour Wednesday night.

Next-day power prices at the ERCOT North hub, which includes Dallas, jumped to a two-week high of $611 per MWh for Friday from $537 for Thursday. That compares with an average of $101 so far this year, $78 in 2022 and a 2018-2022 average of $66 per MWh.

And the Texas scorcher is not over yet.

Meteorologists forecast high temperatures in Houston, the biggest city in Texas, will reach 105 degrees Fahrenheit (40.6 Celsius) on Friday, breaking the day’s record of 97 F set in 1999, according to AccuWeather. That compares with a normal high of 91 F for this time of year.

As homes and businesses keep their air conditioners cranked up to escape the heat, ERCOT expects power use to peak at 84,880 megawatts (MW) on Friday, breaking the record high for the month of September for a fifth day in a row.

That compares with the current September record of 83,911 MW set on Sept. 7 and an all-time high of 85,435 MW on Aug. 10.

ERCOT expects supplies to exceed demand by almost 5,000 MW at the peak hour on Friday. At one point on Thursday, the grid forecast demand would exceed supplies by almost 200 MW.

One megawatt can power about 200 homes on a hot summer day in Texas.

With forecasts for less hot weather over the weekend and the usual shutdown of many businesses, ERCOT forecast demand would decline on Saturday and Sunday.

(Reporting by Scott DiSavino; Editing by Tomasz Janowski)

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