Texas electricity price surges amid record heat and demand

Texas businesses and utilities in danger of running short on electricity will have to pay big money to shore up their reserves.

The cost to acquire advance power for 4 p.m. Monday — when demand begins to spike and solar production starts to diminish — hit nearly 50 times its usual price on Sunday, according to the Electric Reliability Council of Texas (ERCOT).

ERCOT expects demand to peak Monday afternoon at just shy of 83,000 megawatts — about 3 percent higher than last year's all-time records.

The grid has just under 6,000 megawatts in reserve capacity, according to ERCOT. When afternoon comes, those numbers can spike even further, according to analysis from BloombergNEF.

Last Tuesday afternoon, ERCOT averaged over $4,000 per megawatt hour in real-time trading — more than double the day-ahead prices.

That's nearly 100 times what prices were the previous week, before the heat wave began.

The state agency "likely" paid power plants a billion dollars last Tuesday alone, BNEF found. 

And power customers — largely utilities and big industrial concerns — paid $1.7 billion that same day.

That price hike was supply as much as demand. While the state's steadily increasing solar supply has helped offset the record load on ERCOT's grid, West Texas wind turbines — becalmed by the colossal mass of still, hot air hanging over Texas and Mexico — have been underproducing.

Late Tuesday afternoon, as grid load peaked, the Texas wind fleet was unusually sluggish — and was producing about a third less power than on an equivalent day in 2019, even though the state had fewer windmills then.

The worst may lie ahead. 

"Peak demand days [in Texas] historically happen in July and August — meaning this past week could be a preview," the BNEF authors noted.