Surging heat fuels power demand records in 3 US markets

Dive Brief:

Multiple U.S. electricity markets reported record demand this week as higher temperatures pushed up power usage around the July 4 holiday.
The PJM Interconnection, which includes 13 mid-Atlantic states, reported 144,557 MW of demand on July 3, the highest level since Aug. 2016. The Electric Reliability Council of Texas, reported 69,647 MW of demand on July 2, a record for the month, and the New York ISO reported its highest demand since 2013, at 32,810 MW, on July 2.
All markets had sufficient generation reserves to meet demand, but the bigger test for ERCOT will likely come this summer, when the grid operator expects to break all-time electricity demand records.

Dive Insight:

Mid-summer power demand records meant higher prices across some U.S. wholesale electricity markets this week, but operators say they had plenty of generation on hand to meet the uptick in usage.

In PJM, power prices approached $300/MWh on Monday, Platts noted, and on Tuesday, prices in its Western node reached above $103/MWh. Prices in the New York ISO also rose to more than $70/MWh, Bloomberg noted Monday, almost 90% higher than prices on Friday.

High reserve margins in PJM and NYISO — 22% and 18%, respectively — mean both markets had more than enough capacity to meet demand, but questions remain about ERCOT, which said this spring its margin had shrunk to 11%, below its target of 13.75%.

ERCOT expects to hit a peak demand record of 72,974 MW later this summer with resource capacity of 77,658 MW. That should allow the grid to operate reliably, but unexpected outages to major generators could prompt the grid operator to enact demand-side management measures, including potential emergency load shedding.

Tighter reserve margins in ERCOT are the product of generation retirements, particularly older coal-fired plants that cannot compete with cheaper natural gas and renewable resources in the market. This summer's power demand is seen as a test for the grid operator's energy-only market, which lacks a capacity market used in other regions to ensure long-term power supply. This spring, ERCOT executives announced they would consider revamping their reserve margin targets.