Nature of The Market
Electricity is by its nature difficult to store and has to be available on demand. Consequently, unlike other products, it is not possible, under normal operating conditions, to keep it in stock, ration it or have customers queue for it. Furthermore, demand and supply vary continuously.
There is therefore a physical requirement for a controlling agency, the transmission system operator, to coordinate the dispatch of generating units to meet the expected demand of the system across the transmission grid. If there is a mismatch between supply and demand the generators speed up or slow down causing the system frequency (either 50 or 60 hertz) to increase or decrease. If the frequency falls outside a predetermined range the system operator will act to add or remove either generation or load.
In addition, the laws of physics determine how electricity flows through an electricity network. Hence the extent of electricity lost in transmission and the level of congestion on any particular branch of the network will influence the economic dispatch of the generation units.
The scope of each electricity market consists of the transmission grid or network that is available to the wholesalers, retailers and the ultimate consumers in any geographic area. Markets may extend beyond national boundaries.
Read more about this topic: Electricity Market
Famous quotes containing the words nature of, nature and/or market:
“There are some things, my dear Fisher, which do not bear much looking into. You undoubtedly have heard of the Siberian goat herder who tried to discover the true nature of the sun. He stared up at the heavenly body until it made him blind. There are many things of this sort, including love and death.”
—Stanley Kubrick (b. 1928)
“If the sight of the blue skies fills you with joy, if a blade of grass springing up in the fields has power to move you, if the simple things of nature have a message that you understand, rejoice, for your soul is alive ...”
—Eleonora Duse (1859–1924)
“Talk of a divinity in man! Look at the teamster on the highway, wending to market by day or night; does any divinity stir within him? His highest duty to fodder and water his horses! What is his destiny to him compared with the shipping interests?”
—Henry David Thoreau (1817–1862)