By Millicent Dent and Naureen S. Malik
“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.
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.