(Reuters) - Spot power prices in Texas for Friday crashed from a record high as consumers responded to requests from the state’s grid operator to turn down their air conditioners and take other steps to save energy during a brutal heat wave.
High temperatures in Houston hit 100 degrees Fahrenheit (38 Celsius) on Thursday and were expected to top that on Friday and come close to triple digits over the weekend before slipping to the mid 90s next week, according to AccuWeather.
The Electric Reliability Council of Texas (ERCOT) called on Texans to conserve energy on Thursday and Friday by limiting the use of large appliances and turning the thermostat on their air conditioners up a few degrees.
The combination of heat and humidity will make it feel more like 109 F in Houston Friday afternoon. The normal high at this time of year is 92 degrees.
Next-day power prices at the ERCOT North hub dropped from an all-time high of $974 per megawatt hour (MWh) for Thursday to $73 for Friday, according to Refinitiv data going back to 2010.
That was after real-time prices held below $150/MWh on Thursday. During the last heat wave in mid August, real-time prices hit the grid’s $9,000 bid cap for several 15-minute intervals on a couple of days.
ERCOT said demand peaked at 68,023 megawatts (MW) on Thursday, which was well short of its 69,700 MW forecast earlier in the day. The grid operator also reduced its forecast for Friday’s peak to over 69,600 MW, down from its earlier projection of over 72,000 MW.
That compared with a peak of 68,546 MW on Tuesday, which was a record high for September, and an all-time peak of 74,531 MW on Aug. 12.
One megawatt can power about 1,000 U.S. homes on average, but as few as 200 during periods of peak demand.
ERCOT has more than 78,000 MW of generating capacity available to meet demand this summer but has warned its planning reserve margin was a historically low 7.4% because several generators have retired even as demand rises.
Generators are retiring because power prices have declined in recent years as growing supplies of cheap natural gas from shale formations, like the Permian in West Texas, flood the market. Gas produces a little less than half the electricity in Texas.
Lower power prices make it difficult for some generators , to make money selling electricity, notably those operating old coal-fired plants.
Ercot North prices fell to an average of $33.87/MWh over the past five years (2014-18) from $41.37 during 2009-13 and $59.19 during 2004-08. But with price spikes this summer, prices have averaged $53.76 so far in 2019.
Reporting by Scott DiSavino; Editing by David Gregorio
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