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Copper Tip Energy Services
Hazloc Heaters
Copper Tip Energy

Weather in Texas: Searing Heat Pushes Power Prices Toward Record

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These translations are done via Google Translate

By Millicent Dent and Naureen S. Malik

(Bloomberg) The extreme heat that sent electricity demand and power prices surging to record levels in Texas on Monday is threatening to do it all over again Tuesday.Wholesale electricity prices jumped 36,000% to average as much as $6,537.45 a megawatt-hour across the Texas power grid. It was a record that turned the Lone Star State into the most expensive place to buy power in all of America’s major markets on Monday. Some power contracts traded on the Intercontinental Exchange also spiked, with one hub in Texas jumping to $675 a megawatt-hour, said David Hoy, a trader at Dynasty Power.

“This is blowing up,” he said. “That should be the highest price of the year so far.”

And the worst of the heat has yet to come. After peaking at 101 degrees Fahrenheit (38 Celsius) in Dallas on Monday, temperatures were forecast to climb even higher on Tuesday afternoon, reaching 103 degrees before cooling off. The combination of heat and humidity will make temperatures feel closer to 112. The National Weather Service has issued a heat advisory until 8 p.m. local time Tuesday.

“There will be little to no change in the overall weather pattern through early week, so dry, hot and generally sunny weather will prevail,” AccuWeather meteorologist Isaac Longley said in a report.

The unprecedented market rally highlights how volatile the Texas power market has become as coal-fired power plants, which have seen their profits squeezed by cheap natural gas and renewable energy resources, continue to shutter. Texas’s grid operator has been warning for months that plant retirements and increasing electricity demand has left it with slim supply margins.

Electricity demand hit an all-time high of 74,531 megawatts as people blasted their air conditioners on Monday afternoon, according to grid operator Electric Reliability Council of Texas.

Sky Eye Measurement
Sky Eye Measurement

Monday’s price spike also underscores how dependent the region’s power grid has become on wind farms, which now make up about a quarter of the generation capacity in Texas. Lackluster breezes over the past several days have contributed to higher prices, said Flannan Hehir, a power market analyst at Genscape.

Wind power generation in the region slid by almost 50% Monday, grid data compiled by Bloomberg show.

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