Texas Power Demand to Hit Record Highs as Heat Bakes State

Demand for electricity in Texas will reach record levels on Monday and Tuesday as consumers crank up their air conditioners to escape a heat wave baking much of the U.S. Southeast, according to projections by the state’s power grid operator.

High temperatures in Houston, Texas’ biggest city, will hit 100 degrees Fahrenheit (38 Celsius) on Monday and Tuesday, according to AccuWeather forecasts. The normal high in Houston at this time of year is 96 F (36 C).

The U.S. National Weather Service issued heat advisories for much of the Southeast. In Houston, the combination of heat and humidity will make it feel more like 111-112 F (44 C) on Monday and Tuesday.

The Electric Reliability Council of Texas (ERCOT), grid operator for much of the state, forecast that heat would push peak demand to more than 74,900 megawatts (MW) on Monday and almost 75,000 MW on Tuesday. The all-time high is 73,473 MW on July 19, 2018.

One megawatt can power about 1,000 U.S. homes on average but as little as 200 during periods of peak demand.

Despite high demand, next-day power prices at the ERCOT North hub traded well below their one-year high of $209.25 per megawatt hour last week at just $70 for Friday and $80.25 for Monday.

ERCOT has more than 78,000 MW of generating capacity to meet demand this summer but warned low reserves could force it to issue alerts urging customers to conserve energy.

ERCOT has said its planning reserve margin for this summer was a historically low 7.4% because several generators have been retired even though demand is rising.

The reserve margin is the difference between total generation available and forecast peak demand, with the difference expressed as a percentage of peak demand.

Generators are being retired because power prices in the state and across the country have declined for years as growing supplies of cheap natural gas from shale formations, like the Permian in West Texas, flood the market. Gas produces a little less than half of the electricity in Texas.

Lower power prices make it difficult for some generators, like those operating old coal-fired plants, to make money selling electricity.

Ercot North prices fell to an average of $33.87/MWh over the past five years (2014-2018) from $41.37 during 2009-2013 and $59.19 during 2004-2008.