Demand growth across the country is heating up as a core topic in energy analysis. After a couple of decades of efficiency gains keeping demand growth nationwide near a sleepy 1% per year, a new era of data centers and EVs threatens to shake things up. Nowhere is the excitement over new load growth more palpable than in Texas. In this article, we will describe a form of weather normalization we have developed to track ERCOT structural demand growth monthly. By structural demand, we mean the demand that would have occurred under normal temperature conditions, rather than whatever temperatures occurred and drove demand higher or lower than this baseline rate historically each month. This gives us better insight into how quickly this excitement is (or is not) materializing into meaningful amounts of demand that will impact electricity pricing. This article describes our method for detangling the impact of structural demand growth from the impact of weather patterns each month.

ERCOT’s Outlook

In July 2024, ERCOT released a demand forecast with some very aggressive growth figures. Annual total energy is forecast to grow at just over 15% each year for the next several years, resulting in ERCOT load roughly doubling between 2023 and 2029.

Figure 1 | ERCOT’s long-term annual total energy forecast

Digging into the forecast, the demand growth comes from several categories of which most of the documentation provided by ERCOT is concerned with detailing the regressions and considerations that they make when forecasting their Residential, Business and Industrial load.