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Power Grid Chaos Jolts Texas On Friday, Energy Costs Triple Amid Heat Wave

Summary:
The Electric Reliability Council of Texas (ERCOT) has been asking customers to conserve energy this week as spot power prices in Texas triple to a record on Friday. The state's power grid operator that serves most of Texas declared an energy conservation emergency for the second time this week, the first on Tuesday when temperatures ...

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The Electric Reliability Council of Texas (ERCOT) has been asking customers to conserve energy this week as spot power prices in Texas triple to a record on Friday.

Power Grid Chaos Jolts Texas On Friday, Energy Costs Triple Amid Heat Wave

The state's power grid operator that serves most of Texas declared an energy conservation emergency for the second time this week, the first on Tuesday when temperatures exceeded 100 degrees, and customers cranked up their air conditioners to escape the heat.

Power Grid Chaos Jolts Texas On Friday, Energy Costs Triple Amid Heat Wave

ERCOT asked customers this week to reduce energy use between 3 and 7 p.m. Here is what they asked Texans to do:

  • Increase thermostats 2 to 3 degrees
  • Program thermostats at a higher temp when not at home
  • Use a fan, it can lower temperatures by 4 to 6 degrees
  • Use appliances less (dishwashers, washers, and dryers) or only in the morning hours.
  • Run pool pumps in the early morning or overnight hours and shut them off between 4 to 6 p.m.
  • Keep blinds and drapes closed during the hottest part of the day.

ERCOT reported no rotating power outages.

"High temperatures have resulted in record electricity demand over the last few days and may result in a new record today," said ERCOT President and CEO Bill Magness. "Consumers can help lower energy consumption by taking some simple actions between the hours of 3 and 7 p.m."

From Aug. 7-15, Texas has been dealing with 100-degree weather, with real feel around 110-degrees in some parts. For the second half of the month, temperatures in much of the state could average in the mid-90s.

Power Grid Chaos Jolts Texas On Friday, Energy Costs Triple Amid Heat Wave

Refinitiv data shows next-day power prices at the ERCOT North hub jumped from $265 per megawatt-hour (MWh) on Thursday to $751 MWh by Friday morning, the highest-paid per MWh in almost a decade.

Power Grid Chaos Jolts Texas On Friday, Energy Costs Triple Amid Heat Wave

Real-time prices soared to ERCOT's $9,000/MWh offer cap for several 15-minute intervals for a second time this week, said Reuters. Refinitiv data said it was the fourth time prices hit that cap after January 2018, May 30 and Aug. 13.

And with the heat wave expected to strain the grid even more over the weekend, ERCOT projected demand would climb to over 73,200 MW on Friday and 74,000 MW on Saturday. One MW can power 1,000 U.S. homes on average, but as few as 200 during peak demand periods.

ERCOT has 78,000 MW of generating capacity to meet demand over the weekend.

The jump in energy costs shows just how unpredictable the Texas power market has become as coal-fired generators are retired for cheaper natural gas and renewable energy sources.

Tyler Durden
Tyler Durden (a pseudonym) represents the idea that a return to truly efficient markets is a possibility and a necessity. After having experienced the inner workings of capitalism at various asset managers and advisors, Tyler believes that the current model is flawed and a deleveraging at every level of modern society is needed to reinspire the fundamental entrepreneurial spirit. Visit his blog: ZeroHedge (http://www.zerohedge.com/)

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