Texas heat wave sends power demand to all-time high for May

By Thomson Reuters May 21, 2024 | 9:56 AM

By Scott DiSavino

(Reuters) – Power use in Texas broke the record for the month of May on Monday and will likely top that high over the next week as homes and businesses keep their air conditioners cranked up to escape a spring heat wave.

Extreme weather in Texas is a reminder of the February freeze in 2021 that left millions without power, water and heat for days and resulted in over 200 deaths as the state’s grid operator scrambled to prevent the power system from collapsing.

The Electric Reliability Council of Texas (ERCOT) said the system was currently operating normally with enough supply available to meet expected demand all week.

ERCOT said power demand hit a preliminary 72,261 megawatts (MW) on May 20, which topped the previous record for the month of May, 71,645 MW set in 2022.

That record came as a surprise to some in the market since ERCOT projected lower demand earlier in the day due in part to lingering power outages in the Houston area from severe storms last week.

The record will likely not stand for long with ERCOT projecting demand will reach 73,537 MW on May 21, 74,904 MW on May 24, 75,310 MW on May 26 and 75,868 MW on May 27.

The grid’s all-time peak was 85,508 MW on Aug. 10, 2023.

Analysts expect ERCOT electric use will top that all-time high this summer with economic and population growth in Texas and demand for power from data centers, artificial intelligence (AI) and cryptocurrency mining rising fast.

One megawatt can usually power about 800 homes on a normal day but as few as 250 on a hot summer day in Texas.

High temperatures in Houston, the biggest city in Texas, hit 90 degrees Fahrenheit (32.2 Celsius) for a third day in a row on Monday and will likely remain in that range through May 23 before rising to around 95 F on May 27, according to meteorologists at AccuWeather.

The normal high in Houston at this time of year is 87 F.

Despite the record for the month of May, spot power prices at the ERCOT North Hub, which includes Dallas, eased to $32 per megawatt hour (MWh) for Tuesday from $34 for Monday and an average of $47 over the prior seven days, according to pricing data on the LSEG terminal.

That compares with an average of $30 per MWh this year, $80 in 2023 and $66 over the previous five years (2018-2022).

(Reporting by Scott DiSavino, editing by Ed Osmond)