The Texas grid is a focus in the United States whenever it is tested by extreme weather after a catastrophic failure in February 2021 during freezing temperatures left millions of Texans without power, water and heat for days during a deadly storm.

Texas has limited connection to grids in other states, so is unable to meet spikes in demand with imported power.

This week, grid operator the Electric Reliability Council of Texas (ERCOT) had little trouble meeting demand even as consumption for air conditioning rose temperatures rose as high as 102 degrees Fahrenheit (38.9 degrees Celsius) in the Fort Worth/Dallas area, according to the U.S. National Weather Service.

ERCOT said power use peaked at 80,828 megawatts (MW) on Tuesday, topping the grid's prior all-time high of 80,148 MW set on July 20, 2022.

The grid had a margin of about 13,900 MW at the peak hour, enough to keep prices below $100 per megawatt hour (MWh) all day. During the 2021 crisis, prices rose to around $9,000 per MWh, which was the grid's price cap at that time.

One megawatt can power around 1,000 U.S. homes on a typical day, but only about 200 homes on a hot summer day in Texas.

At the peak hour on Tuesday, wind and solar provided about 35% of the power in ERCOT versus 44% from gas, 14% from coal and 6% from nuclear.

So far this week, solar power generation peaked at a record of 13,086 MW on June 25, according to ERCOT. Wind power, meanwhile, reached a high of 24,237 MW on June 28, which was below its all-time high of 27,044-MW set in May 2022, according to federal energy and ERCOT data.

ERCOT has added over 6,300 megawatts (MW) of wind and solar power plants and over 1,300 MW of battery storage over the past year. The batteries help stabilize the grid, as battery operators store power when prices and demand are low and sell it back when prices and demand are high.

The storage business has been so good in Texas that investors including BlackRock and UBS have bought into battery projects.

ERCOT supplies more than 26 million customers in Texas, representing about 90% of the state's power load, and has said it has enough supplies to meet summer demand.

PRICE SPIKES STILL POSSIBLE

But unexpected power plant and transmission outages can still trigger price spikes in the state, especially if they come when extreme weather is straining the grid.

"Depending on weather conditions and generation output, we could see tight grid conditions periodically this summer," ERCOT told Reuters in a statement.

ERCOT called on customers to conserve energy on June 20 due to outages, and real-time prices soared to around $5,000 per MWh in several parts of the state around the peak hours.

"Further tests appear likely this summer," said Eli Rubin, senior energy analyst at energy consulting firm EBW Analytics Group.

"Particularly if thermal outages remain disconcertingly elevated."

The Energy Information Administration forecast coal power generation in ERCOT would fall to 12.0 billion kilowatt hours (KWh) in the second quarter of this year, versus 16.8 billion KWh for the same period last year, and 17.9 billion KWh in 2021.

In a report last week, the North American Electric Reliability Corp (NERC) said more frequent extreme weather, high-demand conditions and a changing resource mix has made conventional generation, like coal- and gas-fired power plants, less reliable.

NERC said those challenges resulted in the highest overall outage rates of around 8.5% for conventional generation in 2022 since the reliability organization began gathering generator availability data in 2013.

Population and economic growth means the Texas grid is likely to continue to see demand scaling new records in future years.