Heat wave pushes Texas grid to unofficial peakload record, prices to quadruple digits

The Electric Reliability Council of Texas set an unofficial peakload record of 85,559 MW Aug. 20, barely topping the 85,508-MW record set Aug. 10, 2023, and systemwide real-time wholesale power prices spent 75 minutes above $2,000/MWh and 2.5 hours above $100/MWh amid persistent triple-digit temperatures across Texas.

However, temperatures are forecast to ease the remainder of the week, peakloads are not forecast to hit record levels over the next seven days, and power and natural gas prices traded lower Aug. 21 for delivery Aug 22.

ERCOT deployed its ERCOT Contingency Reserve Service twice on Aug. 20: once at 7:26 pm until 8:29 pm CT and from 8:31 until 8:46 pm CT. The ECRS is an ancillary service that can be deployed within 10 minutes to restore frequency or voltage levels in the event of a sudden generation outage, primarily to cope with variations in intermittent renewable resource output, but ERCOT reported no sudden loss of generation on Aug. 20.

ERCOT also deployed almost 600 MW of Non-Spinning Reserve Service at 6:36 pm CT Aug. 20. NSRS is an ancillary service for generation that is off-line and can be synchronized and ramped to a specific output level within 30 minutes, or load resources that can be interrupted within 30 minutes. NSRS must be able to provide the specific level for at least one hour.

ERCOT's reported average systemwide hub real-time locational marginal price topped $100/MWh during the 15-minute interval starting at 6:30 pm CT Aug. 20 and stayed above $100/MWh through 9 pm CT. Average prices hit a peak of $4,853.45/MWh for the interval ending at 7:45 pm CT and averaged above $4,000/MWh through 8:15 pm CT.

CustomWeather calculated ERCOT's population-weighted average high temperature at 102 degrees F Aug. 20, but forecast the systemwide high to average 99.4 F Aug. 21.

Market 'spurred innovation'

Asked how ERCOT's performance regarding strong reliability and muted scarcity pricing, compared with summer 2023, Randy Jones, an energy market consultant at Mountaineer Market Advisors, said ERCOT's competitive power market is working.

"It's abundantly clear that the competitive market has spurred innovation in the resource mix that will provide adequacy when firms persist in not building thermal units," Jones said. "The synergy between solar and batteries is yielding lower wholesale prices that should benefit consumers as forward deals are struck."

On Aug. 20, the National Weather Service reports Dallas-area temperatures averaged above 100 F from 4 pm to 7 pm, with heat indexes ranging from a high of 109 F around 6 pm to 103 F around 9 pm. Also on Aug. 20, the weather service reports Houston-area temperatures averaged above 100 F from about 5 pm to 6 pm CT, with heat indexes above 100 F from about noon to about 9 pm CT. Further south, San Antonio temperatures topped 100 F from about 5 pm to about 8 pm CT Aug 20, with heat indexes above 100 F from about 2 pm to about 6 pm CT.

ERCOT's systemwide loads topped 80 GW starting around 1 pm and stayed above that level through 8 pm CT, hitting the record for the hour ending at 6 pm.

Power burn up on year

S&P Global Commodity Insights estimates ERCOT natural gas power burn at less than 7.4 Bcf on Aug. 20, down from the previous five-day average of almost 7.6 Bcf/d. So far in August, ERCOT's power burn has averaged almost 7.2 Bcf/d. For the same 20 days of August 2023, the power burn averaged 6.9 Bcf/d, and the 2019-2023 average for August is less than 5.8 Bcf/d.

Looking forward, the weather service forecast the following high temperatures and heat indexes, where available, for the following Texas cities:

• Dallas: 99 F on Aug. 21 with a heat index as high as 103 F; 101 F Aug. 22 with a heat index as high as 108 F; 100 F Aug. 23
• Houston: 100 F on Aug 21 with a heat index as high as 113 F; 100 F Aug. 22 with a heat index as high as 114; 96 F Aug. 23
• San Antonio: 107 F on Aug. 21; 104 F Aug. 22 with a heat index as high as 109 F; 100 F Aug. 23

Despite continued blistering heat on Aug. 21, intraday trading on the Intercontinental Exchange had ERCOT North Hub prices down $64.25 to about $52.50/MWh.

However, as ERCOT's solar output diminishes around 8 pm CT, power prices may again surge, as wind output is forecast to average less than 4.3 GW for that hour, less than a third of ERCOT's assumption of 13.7 GW that was included in its Monthly Outlook for Resource Adequacy for August.

Real-time on-peak power for delivery Aug. 22 was down about $12 to trade around $31.25/MWh.

Platts assessed Houston Ship Channel gas traded around $1.816/MMBtu for Aug. 22 delivery, down 7.9 cents, or about 4.2%, from the previous day. Platts is part of Commodity Insights.