Climate Change Increases Energy Demand and Cost in Texas

Abstract This study focuses on the Electric Reliability Council of Texas (ERCOT) electricity market in Texas and demonstrates how the increase in temperature due to climate change is already driving large increases in electricity demand and total electricity costs. Results show that, compared to a 1950–80 baseline climate, electricity demand in 2023 was 1.9 GW (3.9%) higher because of the extreme temperatures of that year—climate change contributed 47% of this increase, with the rest coming from short-term climate variability. As demand increases, so does the price per unit of electricity, so consumers are hit double: They must buy more electricity, and each unit of electricity costs more. Using data from the wholesale market, we estimate that the total cost of electricity (the combination of higher demand and higher per unit prices) increased by $7.6B in 2023 compared to the baseline climate, $290 per ERCOT customer, with most of this increase occurring during the summer. Climate change contributed about 29% of this ($2.2B, $83 per customer), while short-term variability contributed the rest. About two-thirds of this increase is due to price increases triggered when the ERCOT grid becomes constrained. Investments in increasing the power supply or the ability to transmit it across the state, or reducing demand (e.g., demand response), could substantially reduce the impact of increasing temperature on the cost of electricity in Texas. Significance Statement Quantifying the impacts of warmer temperatures due to climate change on society is a key goal of the climate science community. In this paper, we develop a methodology for calculating the cost of increased temperatures on electricity consumption. We show that climate change is driving up the costs of electricity in Texas. Compared to the climate of the mid-twentieth century, electricity demand was 4.1% higher in 2023, with climate change responsible for about half of this increase. This increased the total cost of electricity by $7.6 billion, $290 per person. Climate change contributed about 29% of this extra cost, representing a significant burden on the poorest in our society.