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

By Scott DiSavino

(Reuters) -Power prices in Texas soared on Friday with electric use expected to hit a record high as homes and businesses blasted their air conditioners to escape another sweltering heat wave.

So far this week, the state’s electric grid operator has passed several reliability tests after urging homes and businesses to conserve energy 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 hotter weather could boost Friday’s demand to a record high.

Texas residents have been especially concerned 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 caused by ERCOT’s actions. That was due in part to the grid’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.

ERCOT expects power use to peak at 85,890 megawatts (MW) on Friday, which would break the grid’s all-time high of 85,435 MW on Aug. 10.

ERCOT expects supplies to exceed demand by almost 2,500 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.