Texas power use to hit record as temperatures soar

© Reuters. FILE PHOTO: Overhead power lines are seen during record-breaking temperatures in Houston, Texas, U.S., February 17, 2021. REUTERS/Adrees Latif

By Scott DiSavino

(Reuters) -Power demand in Texas is set to break the all-time record this week, far ahead of the hottest days of summer, testing the resilience of the power grid after generation issues earlier this year and days-long blackout during a deep freeze last year.

Extreme weather is increasingly straining power grids across the United States, and regulators are already predicting record heat and drought this summer could cause rotating blackouts in several regions of the country.

Texas is the most closely watched state among power analysts given its unique set-up and its heavy power demand. The Electric Reliability Council of Texas (ERCOT), which operates the grid for most of the state, expects power demand to surge to an all-time record on Tuesday - surpassing levels reached in August of 2019.

The state is the nation's largest energy producer and its biggest energy consumer. Its grid is largely isolated from the rest of the United States to avoid certain federal regulations, which keeps it from drawing on other U.S. grids in an emergency. The state endured several days without power during Winter Storm Uri in February 2021.

ERCOT said it has enough resources available to meet forecast demand, but it has already run into trouble this year.

During a mini-heatwave in mid-May, ERCOT was forced to ask customers to conserve energy after several power plants shut unexpectedly, causing real-time prices to briefly soar to over $4,000 per megawatt hour (MWh), compared with an average of $60 per MWh so far this year.

Even if ERCOT has enough resources to keep the lights on this summer, the grid's power lines may not be able to move all the energy from where it is generated to where it is consumed, boosting costs for consumers.

"Transmission congestion in the real-time market was up 46% in 2021, totaling $2.1 billion," Potomac Economics, ERCOT's Independent Market Monitor, said in a report in May. When that congestion occurs, it raises prices for buyers who need to source power. More than $560 million of the congestion cost was generated during Winter Storm Uri.

AccuWeather is forecasting temperatures in Houston to remain in the high 90s Fahrenheit all week, eventually hitting 101 F (38.3 degrees Celsius) on Saturday, several degrees higher than the normal of 91 F at this time of year.

"ERCOT weather-adjusted loads have been increasing rapidly since mid-2021," said Morris Greenberg, senior manager North American power analysis at S&P Global (NYSE:SPGI) Commodity Insights.

ERCOT expects power usage will reach 77,544 megawatts on Tuesday, which would top the grid's all-time high of 74,820 MW set in August 2019.

ERCOT says the addition of wind and solar plants over the past year should boost the amount of power resources available to 91,392 MW. One megawatt can power around 1,000 U.S. homes on a typical day, but only about 200 homes on a hot summer day.

Power demand is rising as Texas was the third-fastest growing state by population in the last decade, according to U.S. Census data. ERCOT serves more than 26 million Texas customers covering about 90% of the state's power demand.

The state's industrial sector accounts for 23% of industrial sector energy use nationwide, which is expected to grow due to drilling, refining and crypto-currency mining, said Greenberg.