Record high July power demand in the Lone Star State

Mike Zaccardi, CFA, CMT

July 2020 may go down in the books as the hottest month since the EIA has been keeping records (1950). Power market analysts measure the intensity of heat with Cooling Degree Days – or how much temps are hotter than 65 degrees (seen as a neutral temp from a heating & cooling perspective).

An 80 degree average temperatures would be 15 CDDs, for example.

The heat was seen on a smaller scale and shorter timeframe earlier this week in the Texas power market. ERCOT notched a fresh record high July power demand level Monday afternoon – the all-time for any day occurred on August 12, 2019 at 74,820 megawatts.

Straight from the horse’s mouth, “ERCOT set a new peak demand record for July, reaching 73,962 MW between 4 and 5 p.m. This is 489 MW higher than the previous July record set in 2018.” But this extreme demand day was a total opposite, in a sense, a hot stretch last year.

Texas had a brutal heat wave during the August 12-15 period of 2019. Real-time power prices jumped from the normal $20-$40 range to the price cap of $9,000 at times. Absolutely wild! The cost to serve load for just one of those days was the equivalent to that of many normal weeks. The only previous time prices reached their cap was during the infamous Polar Vortex of early 2014. So that event sparked many headlines and debriefs.

So what’s the difference this time around? Why no huge price spike? As they said in one of my favorite movies, “Twister” – it was windy.

Wind generation was abnormally high in Texas this past Monday afternoon, making demand-net-of-wind actually quite reasonable. Also, ERCOT had been forecasting a better reserve margin this summer versus last summer – that just means there are better resources in place to meet peak demand to avoid emergency procedures.

But the summer is young. Parts of Texas and points just eastward have an ‘average hottest day of the year’ in early August. There could still be some fireworks.

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Map used with permission from