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Arctic explosion triggers power cut in energy-rich Texas

The arctic air flowing south into Texas this weekend will test the reliability of the state’s coasting electricity market while generating record consumption of natural gas in the United States.

Temperatures are expected to reach daily lows across much of the central United States, with Dallas expected to drop to 6F (-14C) on Monday after nearly a week of below normal cold weather.

The Texas grid operator warned Monday morning of “potential grid voltage conditions” with record winter demand for electricity. The price of electricity delivered in the state topped $ 2,000 per megawatt hour on Friday, well above prices that averaged $ 25 last year.

Energy traders said Texas is working to avoid the types of problems that beset California last summer, when a heat wave and unexpected generator failures led to embarrassing power outages in the state.

“The market is saying that electricity generation will be extremely restricted,” said Brian Beebe, senior vice president of Houston-based Swiss Re, which helps companies manage climate and energy risks.

The severe weather explosion follows a winter of warmer-than-normal temperatures across the Americas. Matt Rogers, chairman of the Commodity Weather Group, a forecasting company, said the arctic air mass released following warming of the stratosphere in early January, an event that had previously led to freezing temperatures in the ‘Is. Asia and Europe.

The frost hit Texas energy markets hard. The largest producer of oil and gas in the United States, the state is also the largest consumer of electricity. About half of Texas’ households are heated with electricity, and many people are working from home during the pandemic.

The Texas Electric Reliability Council, the state’s grid operator, said Monday morning demand could surpass a previous winter high of nearly 66 gigawatts set in January 2018.

Swiss Re’s Beebe said the record “will be broken – it’s just a question of how much”.

At the start of winter, Ercot declared nearly 83 GW of available generation capacity. However, some of that capacity had been taken out of service for scheduled maintenance and may not be restored by the predicted crisis on Monday, Beebe said.

The Texas wholesale electricity market does not reward generators who maintain spare capacity. They are only paid for the energy they sell, an approach that has boosted investment in new gas, wind and solar power plants, but which may lead to a thin cushion between supply and demand. Prices can skyrocket to $ 9,000 per MWh in times of scarcity.

Texas recorded several days of below-normal cold last week. Natural gas-fired power plants have met most of the corresponding increase in electricity demand, with their Ercot market share rising to more than half from one-fifth.

The state is also the American leader in wind power. Yet wind farm output slipped from 42% to 8% of Ercot’s supply between Sunday and Thursday, as ice disrupted some turbines, the agency said.

Line graph of hourly production by source (MWh) showing gas output increased as wind decreased in Texas

Cold snap squeezes supplies in a U.S. natural gas market that serves homes, businesses, power plants, heavy industry and a overseas export market.

Total U.S. demand, including exports, is expected to exceed 160 billion cubic feet on Monday and approach 170 billion cubic feet on Monday, beating the previous daily record of around 10 to 15 billion cubic feet, said S&P Global Platts Analytics.

US gas futures for delivery in March stood at $ 2.912 per million British thermal units on Friday, up 4.4 cents. But in the delivery market in Houston over the weekend, the price was 161 million btu, a jump of about $ 150 a day, according to S&P Global Platts.

Meanwhile, the frost was hampering the flow of gas from the Texas and Oklahoma fields, said Luke Jackson, North American natural gas analyst at S&P Global Platts.

“It’s like a perfect storm: you have a record demand and you lose your gas production. This is starting to create competition for gas. There is not enough gasoline for everyone, ”he said.

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