Electricity prices in Texas skyrocketed 1,600% as a heat wave fueled record energy demand

Hotter temperatures in Texas are expected to set a new all-time high in energy use in May, causing electricity prices to spike.

The state’s grid operator, the Electric Reliability Council of Texas (ERCOT), predicts demand will increase from 57,486 MW on Friday to 71,893 MW on Monday, 72,725 MW on Tuesday and 74,346 MW on May 24. 5. based on Reuters.

Next week could see demand break the current record of 71,645 MW set in May 2022, while remaining close to the all-time high of 85,508 MW set on August 10 2023.

That’s because weather forecasts in top cities like Houston and Dallas have put temperatures in the high 90s, well above the seasonal norm, meaning many Texans will be turning on their air conditioners. their.

Expectations of the latest demand surge have boosted power prices in the spot market, with next-day power prices at ERCOT’s north hub rising to $120/MWh on Friday from $40 on Thursday . LSEG Pricing data quoted by Reuters.

And in about an hour late Friday, the next day’s price on ERCOT’s website jumped to $688/MWh, up more than 1,600% from the day before.

The Texas electricity market is deregulated and uses its own power grid. But the actual price consumers pay depends on the type of contract they sign with the supplier. And since February 2021, energy suppliers have been prohibited from completely passing on wholesale electricity prices to their residential customers.

Severe heat waves in recent summers have broken electricity demand records, causing sharp and sudden fluctuations in spot prices. In September, Electricity prices in Texas increased by 20,000%.

Meanwhile, Texas has seen an influx of residents since the pandemic as people leave states like California and New York, where the cost of living is higher, meaning there will be more More customers are connected to the grid.

Texas has also become a bitcoin mining hotbed, adding to demand for electricity, as the state’s deregulated electricity market and abundant cheap natural gas become attractive to the heavy-use sector. energy. The growth of data centers and the rise of artificial intelligence technology are also driving demand.

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