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Texas Grid Operator Warns Of Blackouts

Tyler Durden's Photo
by Tyler Durden
Monday, Jul 11, 2022 - 12:30 PM

The Electric Reliability Council of Texas (ERCOT), which operates Texas' electric power grid, asked households and businesses to conserve power this afternoon and warned of potential rolling blackouts

The grid faces a "potential reserve capacity shortage with no market solution available," ERCOT said in a notice released Sunday night. 

ERCOT asked people to reduce energy consumption between 1400-2000 local time when temperatures are expected to soar into triple-digit territory. 

Scorching temperatures are driving record power demand and low wind output could push the grid near its breaking point. Current projections show wind generation coming in around 8% of its total capacity during peak hours today. 

Today's forecasted power demand is expected to be around 79,671 megawatts (near a record high). 

We previously noted an imminent power shock in Texas could result in higher crude prices because oil/gas industries would be forced to shutter operations during blackouts. Here is what a dealer for one of the larger institutional crude and products books told us:

... looking like Texas may be short power for the next week or so. Wild rumors floating around that the Governor may call on industrials (ie refineries) to idle or significantly de-rate plants for up to a week to keep from having to black out residential consumers (Mom&Pop) in a heat wave. Don’t want to make folks sweat at home in the dark during an election year.

Key takeaway? Cracks may just be getting started and could go parabolic here.

Max temperatures across the state will bounce between 100-105 degrees Fahrenheit through the second half of the month, meaning no relief in sight. 

Reuters notes, "record temperatures are expected across much of the state on Monday."

A reporter at Dallas-Fort Worth WFAA, Chris Sadegh, tweeted"Buckle up and tighten up. Could be an iffy day for the Texas energy grid."

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