(Bloomberg) — An Arctic blast sweeping across North America is raising the risk of power outages. With more cold weather expected, power grids from Texas to Alberta will continue to be under pressure and some electricity prices have skyrocketed.
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In Texas, where one of the biggest grid tests since deadly winter power outages is set to hit 2021, electricity demand from homes and businesses is expected to hit a winter record of more than 75 gigawatts on Sunday – and may reach a record-breaking all-time record later in the week. The state grid operator urged people to conserve electricity for Monday morning and warned of a lack of power capacity between 7 a.m. and 9 a.m., “creating the risk” of an energy emergency, it said in a statement Sunday evening.
Still, state officials have said they do not expect a grid failure.
In Washington state and Alberta – where more than a million people saw temperatures in Calgary dip below minus 20°F (-29°C) at midday local time – utilities and grid operators are urging consumers to conserve energy.
More than 250,000 homes and businesses across the U.S. were already without power as of late Sunday afternoon, with outages concentrated in Oregon, Michigan and Pennsylvania, according to PowerOutage.us, a website that tracks utility outages.
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Cold temperatures can bring down power grids in two ways. Firstly, teeth-chattering temperatures are prompting people to turn up their heating, leading to a surge in demand. At the same time, the extreme conditions can also lead to energy supplies being disrupted, as freezing weather can lead to temporary shutdowns or production restrictions.
A natural gas storage facility capable of meeting 25% of the Pacific Northwest's peak energy demand unexpectedly closed Saturday, sparking warnings from local utilities about energy conservation. According to a statement, the facility was in the process of resuming operations on Sunday.
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Electricity prices are rising
On Friday, US natural gas futures settled at their highest level in more than two months due to weather concerns. It is encouraging that inventories in the USA are well filled, as demand for the heating fuel has so far been dampened by the relatively mild winter weather.
Meanwhile, electricity prices are rising sharply in some places.
The U.S. Pacific Northwest saw the highest prices on Sunday, with spot power trading around $1,000 per megawatt hour near Seattle and Portland, Oregon, in the afternoon. According to the California Independent System Operator, that's about 10 times higher than the day-ahead price for the same period.
For Texas – during the most tense period on Monday – the average grid price for electricity on the state's grid rose to $1,072 per megawatt-hour for supplies secured in the day-ahead market on Sunday, from about $79 the day before, as Ercot data shows.
Texas is in particular focus because the current blast is one of the few freezes to hit the state since an extremely cold system in February 2021 killed more than 200 people and left millions powerless for days because of the state's electricity and natural gas infrastructure failed.
The Electric Reliability Council of Texas, or Ercot, as the state's main grid operator is known, previously set a winter demand record of 74.5 gigawatts during a cold snap in December 2022. It recorded an all-time high of 85.5 gigawatts in August and is likely to be challenged by this week's freeze.
The Texas power grid will be at its heaviest on Monday and Tuesday mornings, when recent estimates show demand narrowly matching or exceeding supply starting around 7 a.m. These forecasts are volatile. Currently, electricity consumption is expected to rise to nearly 83.6 gigawatts on January 15 and to an all-time high of 85.9 gigawatts the next day.
Texas, known for its scorching summers, has never set a new winter demand record.
“Any time we get these cold shots in Texas, the power grid is going to be on heightened alert,” said Tyler Roys, a senior meteorologist at AccuWeather Inc. “What makes it more difficult this week is that it's in the middle and mid East Texas.” He expects the ice to begin Sunday afternoon and last at least until midday Monday.
Read more: Spot gas prices rise over 400% ahead of Texas cold snap
Texans woke up Sunday to freezing temperatures that are expected to drive up electricity demand through at least Tuesday. According to the US National Weather Service, the Dallas area is expected to see highs of around 20°F on Sunday, 25°F on Monday and 28°F on Tuesday before rising back to 43°F on Wednesday.
Before winter, Texas Gov. Greg Abbott and Ercot CEO Pablo Vegas said reforms would ensure adequate power supplies after the 2021 freeze. However, some critics of the operator claim that the reforms resulted in billions of dollars in costs without significantly improving reliability.
Power producers “have never been more prepared for a winter event than they are today, including the availability of a secondary fuel source,” Abbott said Friday.
– With assistance from Elizabeth Elkin, Ruth Liao and Mark Chediak.
(Updates with Ercot's capacity shortage warning in second paragraph)
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