(Bloomberg) — The Texas power grid is facing its biggest test of the year as scorching temperatures threaten to drive demand for electricity beyond the system’s breaking point.
With electricity consumption projected to climb to an all-time high of almost 80 gigawatts, the state’s grid operator is asking residents and businesses to limit energy usage Monday afternoon. That’s driving up power prices as temperatures climb to more than 100 degrees Fahrenheit (38 Celsius).
Power grids around the globe are facing severe tests this summer as climate change drives temperatures to record highs and Russia’s war in Ukraine has strained fuel supplies. In the US, officials have warned that a vast swath of the nation, from the Great Lakes to the West Coast, is at risk of blackouts. Texas has already set new records for power demand six times this year, most recently on Friday as a heat wave engulfs the state.
The region is facing “the most serious kind of heat,” with the worst conditions likely to remain across central Texas through Tuesday, according to Andrew Quigley, a National Weather Service meteorologist. Temperatures should drop from being 100 to 110 degrees closer to the upper 90s to low 100s later in the week. “There will be slight improvement, but the operative word there is slight.”
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The call for conservation lasts from 2 p.m. to 8 p.m. local time, according to the Electric Reliability Council of Texas, the main grid operator. No system-wide outages are expected for now. High demand will be compounded by low wind speeds, which are keeping the state’s massive fleet of turbines at less than 10% of their potential output.
Shortly before 2 p.m. local time, power reserves on the state’s grid dipped to just above 3,000 megawatts, a key threshold that allows officials to take steps to curb demand and boost supply.
Day-ahead power prices for Monday afternoon were as high as $2,084 a megawatt-hour.
The tightest period Monday will be about 2 p.m. local time, when demand is projected to slightly exceed available generating capacity, according to data from Ercot. Temperatures across Texas, including in Austin, San Antonio, Waco, and Abilene could set records for the date, and Houston could get close with a high of 102 Fahrenheit, according to the US Weather Prediction Center.
Almost all of the major cryptocurrency mining operations have scaled down operations, allowing about 1 gigawatt of capacity to flow back to the grid, according to the Texas Blockchain Association. Crypto mining has taken off in Texas in the past year, leading to concerns that the power-intensive operations would tax the state’s energy systems.
Texas’s power grid remains under scrutiny more than a year after the system collapsed during a winter storm, leaving much of the state without power for days. More than 240 people died, and the true economic costs topped $50 billion. Officials enacted a raft of reforms following the crisis, but critics warn the system remains vulnerable.
Ercot and state regulators asked industrial power users to prepare to curtail their usage voluntarily on Monday, especially when prices surge, said Katie Coleman, an attorney for the Texas Association of Manufacturers, who described the communication as typical for summertime events.
“There have been no directives for any industrials to curtail involuntarily,” she said.
The biggest companies operating in Texas include Exxon Mobil Corp., Tesla Inc., Apple Inc. and American Airlines Group Inc., and two Major League Baseball teams currently playing their seasons. The NASA Johnson Space Center is in Houston.
The fate of Texas’s power grid has significant political implications for Governor Greg Abbott, who is up for reelection this year and has insisted the reforms that he and his fellow Republicans enacted following the deadly winter storm have fixed the system.
Abbott’s Democratic opponent in November’s election, Beto O’Rourke, seized on the alert to criticize the governor over his management of the electricity grid. “The governor of the 9th largest economy on earth — the energy capital of the world — can’t guarantee the power will stay on,” the former congressman from El Paso said in a tweet.
(Updates with reserves falling in the sixth paragraph.)
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