The dog days of summer are here. For our family, that means kids’ camps, mountain adventures and an endless series of games invented by the girls. The rules are elaborate, frequently revised and usually understood by everyone except Dad.
ERCOT was playing its own summer games last week. The grid served a preliminary record of 91.1 GW on July 22, more than 5.5 GW above the previous official record. Breaching 90 GW is a big deal. How big? Up there with the Berlin Wall and the Apollo moon landing, at least according to our lead ERCOT analyst.
Load was also pulling a Mondo Duplantis, clearing the record without revealing how high it could really go. Summer in ERCOT is 4CP season. Under Four Coincident Peak, transmission costs are allocated based on demand during the highest 15-minute interval in each of the four summer months. Our team issued 4CP alerts ahead of the record, and some large users were likely responding by curtailing operations, discharging batteries or switching to on-site generation.
Did you notice? Likely not. ERCOT made history without the price spikes or public panic. Chalk that up as a win.
But what is good for customers today may not be good for them in the future. Record load produced a weak price signal for the firm capacity ERCOT may need under less favourable conditions. A few summer days clearing around $70/MWh will not finance much merchant capacity. We think new build needs a long-term contract at around that to pencil, not a handful of isolated summer clears.
While ERCOT was writing records, a transmission fault in Northern Virginia caused data centers to transfer more than 3 GW of demand to backup generation within seconds. For PJM, it was a generator outage in reverse: demand vanished, then returned once conditions normalized.
Large Load drops like this are a growing concern for grid operators. We expect 62 GW of new U.S. data center capacity through 2030. The risk of similar multi-gigawatt load swings is growing, and not just in Virginia.
ERCOT and PJM are telling the same story at different speeds. In Texas, cost-allocation incentives shape gigawatts of demand over hours. In Virginia, automated protection systems remove gigawatts of grid demand within seconds. Those lessons extrapolate across markets.
Grid operators have traditionally treated load as the score and generation as the players. Load is now on the field. It responds to incentives, anticipates the rules and occasionally makes its own moves. Like the games at our house, understanding what happens next requires knowing who is playing and which version of the rules applies.
Comments, questions or things I missed? Send me a note (or hit reply) - I would love to hear from you. Thanks for reading!
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