Commodities and Futures News

US Central states, Texas in danger of power shortages in heat wave

2023.08.24 12:21


© Reuters. FILE PHOTO: A man with American Electric Power (AEP) repairs an electricity cable during a heatwave in Eagle Pass, Texas, U.S. July 28, 2023. REUTERS/Adrees Latif/File Photo

By Scott DiSavino

(Reuters) – Two U.S. electric grids may not have enough power to meet demand plus required reserves on Thursday as homes and businesses crank up their air conditioners to escape a brutal heat wave blanketing Texas and other U.S. Central states.

The Electric Reliability Council of Texas (ERCOT), which operates the grid for more than 26 million customers, projected a “reserve capacity shortage with no market solution available for Thursday … which causes a risk for an (Energy Emergency Alert) event.”

Power grids carry reserves to ensure the system remains reliable in case a large power plant or transmission line fails unexpectedly.

When a grid does not have enough resources to meet demand plus required reserves, operators can take emergency steps to reduce usage and increase supplies.

Those steps include imports from other regions, calls for energy conservation and – in a worst-case situation – controlled, rotating outages to avoid uncontrolled blackouts.

Texas residents have worried about extreme weather since a deadly storm in February 2021 left millions without power, water and heat for days as ERCOT struggled to prevent a grid collapse.

AccuWeather forecast temperatures in Houston, the biggest city in Texas, would reach 107 degrees Fahrenheit (41.7 Celsius) on Thursday. That compares with a normal high of 94 F for this time of year.

ERCOT forecast demand would reach 85,296 megawatts (MW) on Thursday, just shy of its 85,435 MW record set Aug. 10.

Even though demand was not expected to hit a record, ERCOT forecast reserves would fall short because some power plants may not be available on Thursday.

Unlike other U.S. grids, which can import thousands of megawatts from neighboring regions, ERCOT is heavily dependent on its own generation since its transmission system has few interconnections with neighboring systems.

Next-day prices at the ERCOT North Hub, which includes Dallas, soared to $925 per megawatt hour for Thursday from $255 for Wednesday. That compares with an average of $75 so far this year, $78 in 2022 and a five-year (2018-2022) average of $66.

MISO LOOKING FOR POWER

The Midcontinent Independent System Operator (MISO), which oversees the grid serving 45 million people in 15 states from Minnesota to Louisiana, also projected it might not have enough resources to meet forecast demand on Thursday.

“Due to the extreme heat creating near-record electricity demand and unplanned generation outages over the last 12 hours, MISO has declared (an energy emergency alert),” MISO spokesman Brandon Morris said in an email.

“While stressed, the power grid remains stable and declaring (the alert) allows MISO to access additional resources to maintain reliability,” Morris said, noting the grid is working with utilities and neighboring grids to “have every available resource available throughout the day.”

MISO projected it would have 125,907 MW of supplies available with 120,656 MW from internal resources and 5,251 MW of imports.

That would not be enough to meet the grid’s forecast peak of 127,692 MW, which would top the system’s all-time high of 127,100 MW in July 2011.

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