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:
“It is the nature of our desires to be boundless, and many live only to gratify them. But for this purpose the first object is, not so much to establish an equality of fortune, as to prevent those who are of a good disposition from desiring more than their own, and those who are of a bad one from being able to acquire it; and this may be done if they are kept in an inferior station, and not exposed to injustice.”
—Aristotle (384–322 B.C.)
“I consider it useless and tedious to represent what exists, because nothing that exists satisfies me. Nature is ugly, and I prefer the monsters of my fancy to what is positively trivial.”
—Charles Baudelaire (1821–1867)
“Have you not heard of that madman who lit a lantern in the bright morning hours, ran to the market place, and cried incessantly: “I seek God! I seek God!””
—Friedrich Nietzsche (1844–1900)