Abstract
This study focuses on the 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 1950–1980 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.
© 2025 American Meteorological Society. This is an Author Accepted Manuscript distributed under the terms of the default AMS reuse license. For information regarding reuse and general copyright information, consult the AMS Copyright Policy (www.ametsoc.org/PUBSReuseLicenses).
