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Electricity looking hot, hot, hot in Texas

Ryan Hardy, energy market expert at PA Consulting, comments on Texas’ expected electricity demand this summer.

Click here to read the full Wall Street Journal article

The article notes that the Electric Reliability Council of Texas, the grid operator for roughly 90% of Texas’s electric load, expects to set another record for peak electricity demand this summer season: 75.2 gigawatts. That is even as overall U.S. summer electricity demand is expected to fall to the lowest level since 2009, according to projections published Wednesday by the Energy Information Administration.

Demand growth is somewhat built in for Texas. Unlike many other places in the country, the state’s electricity consumption has been on an upward trajectory as its population continues to grow alongside a booming energy industry. Last year, that region’s average electricity load grew by 13% compared with a year earlier. 

That makes for another exciting summer season for those generating electricity in Texas: Pair a very hot day with little wind—wind accounts for 26% of electricity generation in the market—and generators can earn up to $9,000 per megawatt-hour. Hypothetically, it would take only about 15 hours at that price level for a natural-gas combined-cycle power plant to meet its annual earnings need noted Ryan. By comparison, day-ahead average power prices overall were $38 per megawatt-hour in 2019.

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