The National Weather Service has issued heat advisories across California's Central Valley and coastal regions, including the San Francisco Bay Area and Los Angeles, while parts of Southern California face more severe extreme heat warnings. With cooling demand expected to climb sharply over the coming days, the state's power grid is under mounting pressure, particularly in the evening hours when solar generation tapers off.

Temperatures across the Los Angeles area are forecast to reach 85 to 105 degrees Fahrenheit, roughly 10 to 15 degrees above normal for this time of year, according to Bloomberg. San Francisco could hit 86 degrees on Wednesday, while Sacramento is expected to reach 100 degrees on Thursday.

The California Independent System Operator (CAISO), which operates the grid serving roughly 80% of California and a small portion of Nevada, projects peak demand of 47,379 megawatts on Wednesday. That would remain well below the all-time record of 52,061 megawatts set in September 2022, when a prolonged heat wave pushed the system close to its limits and prompted the operator to issue repeated evening conservation appeals to households and businesses. CAISO forecasts Thursday's peak at approximately 45,183 megawatts.

The anticipated surge in air-conditioning load is already visible in wholesale power markets. At Southern California's SP15 hub, the day-ahead price for Tuesday's 6 p.m. hour reached $87.69 per megawatt-hour, the highest hourly reading in a little over a week, according to data compiled by grid monitoring firm Arcus Power on its NRGStream platform. Day-ahead prints like this one offer an early gauge of how tight traders expect delivery hours to be.

Evening hours are typically the most strained period for the grid because solar output, a mainstay of California's midday supply, declines just as households return home and increase air-conditioning use. The result is a steep rise in net demand — consumption after solar and other renewable output — that must be covered by resources capable of dispatch on command, such as natural gas plants, batteries and imports.

Bloomberg forecasts show maximum temperatures in California peaking Thursday at around 95 degrees Fahrenheit before sliding to about 75 degrees by mid-month. In the days ahead, points to watch include whether actual loads track CAISO's forecast and whether the operator turns to conservation appeals as conditions tighten, with the mid-month cooldown positioned to shrink cooling loads and ease the evening ramp.

Source: OilPrice.com | By Zerohedge