US SPP expected to set fourth peakload record in July, prices trend 164% higher

The Southwest Power Pool is expected to reach a new peakload record July 19, which would be its fourth this month, as temperatures hover above 100 degrees Fahrenheit and wholesale power prices average 164% higher than a year ago.

SPP forecast peakload to reach 54.114 GW July 19, which would surpass the 52.028 GW record set July 15. SPP also set peakload records July 14 and July 11.

"Due to increasing temperatures, SPP expects to see high loads throughout the week across our 14-state footprint," SPP spokeswoman Meghan Sever said July 19. "Load is expected to be around our all-time peak record number. Our load has increased due to higher-than-normal temperatures across the footprint, but we expect sufficient generation to meet demand."

Coal- and natural gas-fired generation have been leading the fuel mix during the peak records at around 35%-40% of the total share, compared to wind at around 15%, Sever said.

Demand is expected to remain strong throughout the week, with peakload forecast to reach 52.353 GW on July 20, 52.085 GW on July 21 and 52,484 GW on July 22, according to SPP data.

Temperatures are forecast to reach as high as 105 degrees F on July 19, 10 degrees above the seasonal norm, before climbing to 107 degrees on July 20, according to CustomWeather data.

Portions of SPP's footprint, mostly in the southern region, are under a heat advisory and an excessive heat warning, with heat index values up to 113 degrees F, according to the National Weather Service.

Conservative operations advisory extended

SPP extended its conservation operations advisory through 10 pm CT July 20. It was originally scheduled to end July 19, "but because of continued high loads and risks regarding the availability of generation resources, SPP has extended it for an additional 24 hours," according to SPP.

In addition, a Resource Advisory is in effect from noon July 17 through 10 pm July 21 "because of pervasive high temperatures, high region-wide electricity use and uncertainty in its wind forecast," according to SPP.

Neither advisory requires the public to conserve energy.

"SPP has provided instructions on applicable procedures to generation and transmission operators and will send additional information if necessary or as conditions change," according to SPP.

The next step in SPP's grid conditions emergency protocol is an Energy Emergency Alert, which would indicate all available generation has been committed to meet regionwide needs. As conditions worsen, voluntary conservation or service interruptions may be necessary to prevent uncontrolled outages, according to SPP.

Prices react

The market was reacting to the high temperatures and load with higher prices July 19.

SPP South Hub on-peak real-time for July 19 delivery was bid at $125/MWh and offered at $185/MWh on the Intercontinental Exchange, while on-peak day-ahead for July 20 delivery traded around $147/MWh.

In comparison, South Hub on-peak day-ahead locational marginal prices have averaged about $122.50/MWh so far in July, 164% higher than the July 2021 average, according to SPP data. Likewise, North Hub on-peak day-ahead LMP was averaging 103% higher year on year.

In power forwards, prices remain well above 2021 package levels from a year ago, with the three-month outlook indicating a greater probability for above-normal temperature across the SPP footprint, according to the National Weather Service's Climate Prediction Center.

South Hub on-peak August was in the upper $130s/MWh on July 19, 194.4% above where the 2021 package was a year ago, while the on-peak September package was in the $110s/MWh, 178% higher in the same period, according to S&P Global Commodity Insights data.