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 in the very nature of things human that every act that has once made its appearance and has been recorded in the history of mankind stays with mankind as a potentiality long after its actuality has become a thing of the past.”
—Hannah Arendt (1906–1975)
“Learning is, in too many cases, but a foil to common sense; a substitute for true knowledge. Books are less often made use of as “spectacles” to look at nature with, than as blinds to keep out its strong light and shifting scenery from weak eyes and indolent dispositions.... The learned are mere literary drudges.”
—William Hazlitt (1778–1830)
“But the nomads were the terror of all those whom the soil or the advantages of the market had induced to build towns. Agriculture therefore was a religious injunction, because of the perils of the state from nomadism.”
—Ralph Waldo Emerson (1803–1882)