Texas is gearing up for a scorching week ahead as a spring heat wave sweeps through the state, prompting homes and businesses to crank up their air conditioners. The Electric Reliability Council of Texas (ERCOT), which manages the state’s electric grid, predicts that power usage will break records for May. The forecast indicates a significant jump in demand, climbing from 57,486 megawatts (MW) on Friday to 71,893 MW on May 20, then 72,725 MW on May 21, and peaking at 74,346 MW on May 24. These figures will likely surpass the current May record of 71,645 MW set just last year.
Heat Wave and Storms plunge Texas into darkness
The expected heat wave follows a series of severe storms that recently battered the Houston area with hurricane-force winds. The storms left a trail of destruction, causing power outages for about 800,000 homes and businesses, blowing out windows of high-rise buildings, and tragically resulting in at least four deaths. The sudden loss of power plunged much of the city into darkness.
This extreme weather is a harsh reminder of the February 2021 freeze that left millions without power, water, and heat, and caused over 200 deaths. Back then, ERCOT was scrambling to prevent a total collapse of the power system.
Analysts are predicting that ERCOT will set new all-time records for power use this summer, driven by Texas’s economic and population growth, along with increasing demand from data centers, artificial intelligence operations, and cryptocurrency mining.
Typically, one megawatt can power about 800 homes under normal conditions, but during a hot Texas day, that same amount of energy might only suffice for 200 homes. This week, temperatures in Houston are expected to spike from 82 degrees Fahrenheit (27.8 Celsius) on Friday to the low to mid-90s from May 18-29. For context, the normal high in Houston around this time of year is 86 degrees Fahrenheit.
Prices soar amidst the Power crises
Earlier in the week, ERCOT had warned of a potential emergency situation due to a reserve capacity deficiency expected on Friday and Saturday. However, after the severe storms knocked out power for many, reducing overall demand, ERCOT revised its outlook and announced late Thursday that additional capacity would not be necessary for those days.
On the market front, next-day power prices at the ERCOT North Hub, which covers Dallas, surged to a one-week high of $120 per megawatt hour (MWh) for Friday, up significantly from $40 for Thursday. For perspective, the average price so far this year has been $30 per MWh, compared to $80 in 2023 and an average of $66 over the past five years. Furthermore, day-ahead prices on ERCOT’s website skyrocketed to $688 per MWh for a peak hour late on Friday.
As Texas braces for the upcoming heat wave, all eyes will be on ERCOT and the state’s power grid to ensure that the increased demand can be met without major disruptions.