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 the, nature of, nature and/or market:
“In the domain of Political Economy, free scientific inquiry meets not merely the same enemies as in all other domains. The peculiar nature of the material it deals with, summons as foes into the field of battle the most violent, mean and malignant passions of the human breast, the Furies of private interest.”
—Karl Marx (1818–1883)
“Since we are assured that the all-wise Creator has observed the most exact proportions of number, weight and measure in the make of all things, the most likely way therefore to get any insight into the nature of those parts of the Creation which come within our observation must in all reason be to number, weigh and measure.”
—Stephen Hales (1677–1761)
“In countries where there is a mild climate, less effort is expended on the struggle with nature and man is kinder and more gentle.”
—Anton Pavlovich Chekhov (1860–1904)
“Today the tyrant rules not by club or fist, but, disguised as a market researcher, he shepherds his flocks in the ways of utility and comfort.”
—Marshall McLuhan (1911–1980)