Searing Heat From Texas to California Strains Power Grids

(Bloomberg) -- Heat waves in Texas and California are threatening to push electrical grids to the brink, prompting the specter of blackouts yet again in the two most populous U.S. states.

Texas officials are asking customers to conserve power as generating plants with a combined capacity of 12.2 gigawatts -- or enough to run about 2.4 million homes -- are down for repairs amid the heat. California’s grid, meanwhile, is being swamped with demand as temperatures are forecast to exceed 110 degrees Fahrenheit (43 Celsius) in the coming days.

The searing weather marks the first heat-related stress tests of the year for U.S. power grids as a historic drought grips the western half of the nation. It comes 10 months after California resorted to rolling blackouts last summer, briefly plunging more than a million people into darkness. In February, much of Texas was left without power for days during a frigid winter storm that paralyzed power plants and left more than 100 people dead.

While California officials said they’re confident they could keep the lights on this week, Texas grid operators are struggling to determine why so many plants are unexpectedly breaking down. The number of generators out of commission is triple what officials expect for this time of year.

“This is very concerning,” Warren Lasher, a senior director for the Electric Reliability Council of Texas, said during a briefing. “It’s not clear why we are seeing so many units offline.”

While Texas grid officials don’t expect outages on Monday, it will be a day-by-day struggle to keep the system running this week, Ercot officials said during the briefing.

The blackouts earlier this year in Texas are estimated to have cost the state’s economy as much as $130 billion and drove several power retailers and an electric co-operative into bankruptcy.

Texas lawmakers recently approved overhauls to stabilize its power market. Measures included requiring power plants ensure they can operate in extreme cold and provisions for state-backed financial assistance to the grid operator as well as utilities hit by soaring wholesale electricity prices.

“Everything that needed to be done was done to fix the power grid in Texas,” Republican Governor Greg Abbott told reporters Tuesday while signing the legislation into law.

Ercot said Monday that coal and gas plants accounted for almost three quarters of the generating capacity that was out of service.

Texas power-plant owners producers normally finish repair work by the start of summer so they can take advantage of soaring prices when demand surges. This year, however, the price cap for wholesale power in the market was slashed to $2,000 megawatt-hour from $9,000 after the February storm, limiting how much generators can earn.

The generators out of service include one of the two units at the 2.3-gigawatt Comanche Peak nuclear plant near Dallas, which was taken offline over the weekend following a fire at the main transformer, according to Vistra Corp., which own the plant.

Adam Sinn, owner of power-trading firm Aspire Commodities LLC, said the number of power plants out of service was unacceptable. “This is not a sustainable situation,” he said. “Texans deserve answers.”

Spot power at Ercot’s North hub, which includes Dallas, surged more than 6,000% to average $2,000 a megawatt-hour as of 3:15 p.m. Eastern time before paring gains, according to data compiled by Wood Mackenzie.

In the West, heat warnings and watches from Phoenix to Northern California will be in place through Saturday evening, the National Weather Service said Monday. Temperatures in California’s Central Valley could rise to 113 between Thursday and Saturday. Parts of Arizona could hit 119.

California has ordered utilities to line up extra power supplies and giant batteries to prepare for this summer, but officials warn the system could still face shortfalls. Grid operators said Monday that they don’t expect to call for blackouts during this week’s heat.

While cooling demand will surge, the heat comes just before the summer solstice, making sunlight available for longer to power the region’s solar farms. It also helps that wind output in California tends to be strong in June, and even though a drought has left hydropower dams depleted, it’s still early enough in the season that they will be able to shore up supplies, according to energy consultancy Wood Mackenzie Ltd.

Day-ahead power prices in Southern California jumped 123% to average $64.44 a megawatt-hour for on-peak hours, the most since Feb. 18, according to the firm’s data.

Afternoon temperatures this week could reach 110 degrees to 119 degrees in Arizona, south and west of Phoenix, the weather service said. The inland valleys near San Diego may reach 106. Officials warned that people should stay indoors if possible.

In Southern California, the weather service also warned of elevated wildfire risk in Santa Barbara County through Tuesday morning due to high winds and drying vegetation. In response, Edison International’s Southern California Edison said that it may need to cut power to 5,160 customers in the county to prevent live wires from sparking blazes, according to a post on its website.

©2021 Bloomberg L.P.