Texas Power Prices Surge 6,000% as Grid Calls for Conservation

Texas spot electricity prices soared by more than 60-fold, climbing toward the $5,000 price cap as the state grid faces some of the tightest conditions for power supplies so far this summer.

(Bloomberg) — Texas spot electricity prices soared by more than 60-fold, climbing toward the $5,000 price cap as the state grid faces some of the tightest conditions for power supplies so far this summer.

Real-time prices on the grid jumped to about $4,750 a megawatt-hour Thursday at 3:45 p.m. local time, up from the grid average of $75 at the same time Wednesday, according to data from the Electric Reliability Council of Texas, or Ercot, as the grid operator is known.

The grid prices are volatile and can see massive spikes. Still, the latest figures showed spot price were at the highest in more than five weeks, according to data compiled by Arcus Power’s Nrgstream.

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Intense heat continues to bake Texas, sending demand for electricity soaring as homes and businesses crank up the air conditioning.

On Thursday, Ercot appealed to households and businesses to voluntarily conserve power from 3 p.m. to 8 p.m. to help reduce stress on the grid. No emergency has been declared, however, the margin of spare supplies is expected to narrow significantly unless more power generation comes online or consumers restrict use.

The grid operator expects to have enough supply to meet peak demand of about 83.3 gigawatts at around 6 p.m. But two hours later at sunset, the buffer of spare available supplies will fall to just under 2.3 gigawatts. If reserves do stay that narrow as forecast, that may trigger a so-called Level 1 emergency, so Ercot can call on more back-up supplies.

Read More About Texas Grid Alerts: Texas Grid Keeps Power on With Aid of Alerts When Demand Soars

While demand is hovering at record levels for this time of the year, it’s still well off the all-time high of 85.5 gigawatts reached on Aug. 10. But supply conditions were tighter on Thursday because wind generation has plunged — in line with forecasts.

Even though power consumption has jumped to records about a dozen times since early June, far exceeding Ercot’s own forecasts, the Texas grid for the most part has shown few signs of operational stress. A big reason for that is solar generating capacity has jumped compared with last summer and the evening ramp up in wind generation has frequently been able to offset the daily drop in solar. Grid conditions are often tightest after sunset, when demand is still high and solar comes offline.

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