Texas’ May heat wave could lead to hotter-than-normal June, boosting power prices

As the Texas power grid copes with a heat wave likely to set a May peakload record, the system may face extraordinarily hot weather in June, followed by more seasonal heat in July and August, according to a meteorologist May 14 .

"The peak of the heat is actually today, but we have very high renewable generation," James Caron, director of meteorology for Asia and North America at Atmospheric G2, a private weather forecast and data company, said during a Gulf Coast Power Association webinar about the summer weather outlook for the Electric Reliability Council of Texas, the Midcontinent Independent System Operator and Southwest Power Pool.

"My concern though, going into tomorrow and especially Friday is that while the daytime highs aren't quite as elevated as they are today, the wind generation does start to drop over the next few days," Caron said.

ERCOT power prices surged in response to the current heat wave, but a forecast for slightly above-normal tropical storm activity may weaken power prices over the hurricane season, June 1 through Nov. 30.

After San Antonio had a high of 102 degrees Fahrenheit May 13, the city was forecast by CustomWeather to hit 105 F May 14 and stay in triple digits through May 20. CustomWeather expects Dallas highs to rise from 93 F May 13 to 101 F May 14, but stay in the low 90s or high 80s through May 23.

As context, CustomWeather calculated the ERCOT region's population-weighted temperatures to average 70.9 F, up 3.3 degrees below normal, on May 12, shifting to 79.9 F, up 4.7 degrees above normal, on May 13, and rising to 85.3 F, 10.1 degrees above normal, May 14 and staying above-normal through May 16. May's record population-weighted average temperature is 85.8 F, set May 26, 2024.

ERCOT's recent peakload changes are:

May 11: 54.5 GW, 2.3 GW below the previous five-year average of 56.9 GW

May 12: 65.5 GW 11.1 GW above the average of 54.4 GW

May 13: 74.8 GW, 20.8 GW above the average of 54 GW.

Around 10:30 am CT, ERCOT forecast load to peak on May 14 at 80.6 GW, a new May record and 22.7 GW above the previous five-year average of 57.9 GW. The existing record is 77.1 GW, set May 27, 2024. May 15's peakload forecast is 76.7 GW, and May 16's is 77.8 GW.

Markets heating up

ERCOT North Hub day-ahead on-peak locational marginal prices have climbed similarly:

• May 11: $30.10/MWh
• May 12: $33.55/MWh
• May 13: $41.87/MWh
• May 14: $63/MWh

But power is trading even higher for delivery over the next two days, as the net peakload – total load minus forecast renewable output – strengthens.

On the Intercontinental Exchange the morning of May 14, ERCOT North Hub was trading around $87/MWh for May 15 delivery and $101/MWh for the balance-of-week – i.e., May 16 – package.

Atmospheric G2's net load forecast "looks to be around 58 GW today and very, very similar tomorrow and Friday, even though we have a slightly decreasing temperature forecast," Caron said. "So, it's definitely a concern there in terms of the wind generation dropping, in my opinion."

Looking for summers analogous to the conditions leading into summer 2025 – especially shifting into the El Nino-neutral condition – Caron said "the closest fit year was 2021," with a heat dome in ERCOT starting in June "shared with an upper-level ridge in the Southwest."

"I think that's a risk here as we get into June, but I think that upper-level ridge will eventually shift off to the North and West, which will then allow more southeasterly flow and potentially more precipitation into Southeast Texas," Caron said. "So, it's interesting because we're almost looking at a combination of 2023 and 2024, 2023 being that hot and dry June for most of ERCOT, SPP and MISO, but then you start to open the door for more precipitation like we saw last year in the summer of 2024."

Storms on the horizon

Tropical storm activity may also drive power markets in the region, and Atmospheric G2 on May 13 forecast the following numbers:

• 18 named tropical storms, compared with the National Weather Service's average of 14.4
• Eight hurricanes, compared with the average of 7.2
• Four major hurricanes, compared with the average of 3.2

Across 13 hurricanes making landfall in the continental US from 2021 through 2024, loads dropped an average of 19.3%, and power prices dropped an average of 26.5%, an S&P Global Commodity Insights analysis shows.

Asked to speculate about the likelihood of storms making landfall on the continental US, Caron said, "We should get a better view on that as we progress towards the end of May and early June."

The likelihood of landfall on the US Gulf Coast increases if the "Bermuda High" pressure system sets up further west in the North Atlantic, Caron said.

"If the Bermuda High sets up further west ... it can basically help steer those tropical system due west into the Caribbean, into the Gulf of Mexico, as opposed to a weaker Bermuda High, shifted further east, which would then allow those tropical systems to move northward over the western Atlantic as time progresses," Caron said. "For right now, from what I can see, at least on the longer-range weather models, it does look like it's a bit further west. Again, that can shift over time, but that would be my primary concern."