Electricity Costs Spike 800% In Texas With Extreme Weekend Temperatures

The price of electricity briefly spiked over 800% in Texas during the weekend as the South continues to be battered by this summer's extreme heat wave.

The price of a megawatt-hour rose to more than $2,500 on Sunday at 8 p.m. in most grid sectors across the state, due to an expected rise in demand related to temperatures over 100 degrees. The price at the same time on Saturday was around $275 per megawatt-hour.

The Texas power grid is experiencing extreme volatility: prices during the early morning hours were as low as $15 megawatt-hour on Sunday.

Read also: 7 Air Conditioner Stocks For This Summer’s Infernal Heat Wave

One megawatt is normally enough to provide power to around 750 homes. By Monday, prices had already come down, with a peak of $945 megawatt-hour projected for 4 p.m.

The Electric Reliability Council of Texas (ERCOT) sets grid prices for the day-ahead market on the basis of the expected power consumption for the grid. Consumers are able to choose among several different retail electricity providers.

For Tuesday, the peak price is expected at 4 p.m. at $332 megawatt-hour.

ERCOT, which coordinates 90% of the power in Texas' deregulated power grid, issued a Weather Watch from Sunday to Monday on account of rising peaks in demand for the Lone Star state.

Last week, Texas saw an all-time energy demand peak of 83,593 megawatts on Aug. 1. ERCOT anticipated that demand would reach a new historical record on Sunday at about 4 p.m of 84,400 megawatts, according to Bloomberg. A previous record of 79,828 megawatts was set in 2022.

As of 2020, 52% of the state's electricity was generated by burning natural gas. 23% was wind and other renewables (not including hydroelectric). Seventeen percent still came from burning coal and 8% came from varied sources including nuclear, hydroelectric and petroleum.

Rising temperatures are allowing some Texas residents to make money by selling their production of renewable energy back into the grid when using solar panels like Tesla's solar roof products.

At its Sunday peak, ERCOT estimated that it only had 1,600 megawatts of surplus, although Bloomberg reports the organization can tap into additional supplies in the case of an emergency.

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