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Blackouts in Texas as big freeze upsets energy markets

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(Bloomberg) – Millions of households in Texas are suffering from power outages for the first time in a decade, as an unprecedented frost in the Arctic has wreaked havoc on U.S. energy markets.

The largest cities from Houston to San Antonio were without power for periods of up to an hour at a time as supplies to the second largest state in the United States fluctuated wildly.

Every grid operator and utility company is fighting to restore power right now, said Bill Magness, president and CEO of Ercot, the operator of the state’s electricity grid.

The extreme cold surprised the highly decentralized Texas electricity market, despite a warning a week ago of looming freezing temperatures from the US National Weather Service. With the equivalent of 2 million households cut at a time, the situation is expected to worsen throughout Monday. Ercot expects demand for electricity to hit an all-time high, breaking a record set during a summer heat wave in 2019.

These are the first cold-induced blackouts since 2011. Peak electricity demand typically occurs in summer in Texas when air conditioning use increases. A loss of frequency on the grid caused the shutdown of 30 gigawatts of production. Many stations will have undergone scheduled maintenance, leaving the network more exposed during unusually large demand peaks.

The rotating blackouts will likely last all Monday morning and are a possibility until the weather conditions relax, Ercot said in a statement.

About 800 daily records for cold temperatures have been broken over the past week, as arctic air spreads to the Gulf of Mexico. In the United States, winter storm warnings and weather advisories affect 157 million people, said Brian Hurley, a senior forecaster at the US Weather Prediction Center branch.

Parts of Texas were cooler than Alaska, according to the National Weather Service. The temperature at 5 a.m. in Houston was 18 degrees Fahrenheit, which matches the reading in Anchorage. In the Dallas Fort Worth area, it was 5 degrees Fahrenheit.

The story continues

Frigid temperatures and a storm parade in the United States follow other cases of extreme winter conditions this year that have boomed ports and disrupted energy markets in Asia and Europe. Texas, which is not used to the fury of winters, is getting a good taste. President Joe Biden declared a state of emergency, mobilizing federal aid to help local response efforts.

Power crunch

We would expect to be in emergency operations tomorrow at least Tuesday morning, said Dan Woodfin, a senior manager at Ercot.

The power crisis is worsened by a lack of wind generation with output of more than half at 4.2 gigawatts. Wind turbines can freeze in extremely cold weather, reducing efficiency, and the blades can eventually stop rotating.

Previously, spot electricity prices at the Texas West hub exceeded the grid cap of $ 9,000 per megawatt hour, a 3,466% increase from Friday, according to data compiled by Bloomberg. LNG exports from the United States also plummeted after ports and wells were shut down by the freeze, and oil production was hit as well, with Permian oil production plunging to one million barrels per day. West Texas Intermediate futures contracts rose 2.5%, above $ 60 a barrel for the first time in over a year.

The reduction in crude supplies threatens to spark a rush for everything from propane to fuel oil to the fuels used in portable heaters.

Odessa, one of the largest oil producing areas in the Permian Basin, still has electricity. While San Antonio has lost power with power outages of 10 to 15 minutes, according to sources on the ground.

In Houston, there are long lines to fill up propane cans and firewood is sold. The city can pick up up to 2 inches of snow overnight, as well as ice and sleet, the National Weather Service said. It will be hit by another storm bringing ice and freezing rain on Wednesday.

It’s going to be a cold week, said David Roth, a senior agency forecaster at the US Weather Prediction Center. The southern plains are in a cold pattern and it will take some time for them to come out.

Frozen turbines

A mixture of freezing temperatures and precipitation cripples Texas wind farms. It would be devastating for power plants with contracts to supply a certain amount of electricity at specific times if they had to buy it in the spot market instead to meet their obligations. At the moment, this energy is extremely expensive.

When wind turbine blades are covered in ice, they must be closed, said Joshua Rhodes, a research associate who focuses on energy at the University of Texas at Austin.

The Texas grid has relatively few ties to the rest of the country, making it an island when it comes to supply.

Storms will be largely missed by major cities on the East Coast, said Bob Oravec, senior forecaster with the US Weather Prediction Center. While there may be snow showers and ice in New York and Boston, most of the build-up will occur in upstate New York and the interior New York. England, Monday to Tuesday.

(Add weather data from the seventh paragraph)

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