Texas power demand breaks May record again as prices soar in heat wave

[May 25, 2024]  By Scott DiSavino

(Reuters) -Power demand in Texas broke the record for the month of May for a second time this week on Friday as prices soared ahead of the U.S. Memorial Day long weekend with homes and businesses cranking up their air conditioners to escape a heat wave.

The Electric Reliability Council of Texas (ERCOT), which operates most of the state's power grid for 27 million customers, said the system was operating normally with enough supply available to meet expected demand over the next week.

ERCOT said power demand soared to a preliminary 72,695 megawatts (MW) on Friday, which would top the current record for the month of May of 72,261 MW set last Monday.

ERCOT projected usage would break that new record on Monday, Memorial Day, when it forecasts a peak above 76,500 MW.

The grid's all-time peak was 85,508 MW on Aug. 10, 2023.

Analysts expect ERCOT electric use will top that all-time high this summer with economic and population growth in Texas and demand for power from data centers, artificial intelligence and cryptocurrency mining rising fast.

One megawatt can usually power about 800 homes on a normal day but as few as 250 on a hot summer day in Texas.

In the spot market, next-day power prices at the ERCOT North Hub, which includes Dallas, soared to a two-week high of $141 per megawatt hour (MWh) for Friday, up from $21 for Thursday, according to pricing data on the LSEG terminal.

That compares with an average of $31 per MWh so far this year, $80 in 2023 and $66 over the prior five years (2018-2022).

Day-ahead prices on the ERCOT website, meanwhile, soared to $654 per MWh for one hour on Friday evening.

A general view of electric lines as demand for power surges during a period of hot weather in Houston, Texas, U.S. June 27, 2023. REUTERS/Callaghan O’Hare/File Photo/File Photo

"May-to-date real-time pricing is 50% higher than in any year since 2010 (except for the 2022 natural gas price blowout). This results in more inefficient natural gas generators chewing through more gas ... to keep the lights on," analysts at consultancy EBW Analytics Group said in a note.

RECORD-TYING HEAT

High temperatures in Houston, the state's biggest city, will hold at 95 degrees Fahrenheit (35 Celsius) on Friday and Saturday before rising to 96 on Memorial Day Monday, according to meteorologists at AccuWeather.

The normal high in Houston at this time of year is 88 F (31 C).

AccuWeather said the forecast high of 95 F for Friday would tie the record for the day set in 1955.

ERCOT projected supplies would exceed demand by 5,400 to 42,300 MW over the next week with the 5,400 MW low expected during one hour in the evening of May 26 after the sun goes down and solar panels stop working.

That comfortable level of supply is higher than ERCOT forecast earlier on Friday and assumes nothing changes.

But things always change - power plants and transmission lines shut and return to service, weather forecasts change and storms cause outages.

(Reporting by Scott DiSavino and Laila Kearney in New York, Anushree Mukherjee in Bengaluru; editing by Jonathan Oatis and Josie Kao)

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