An Energetic Exposition II: Inconvenient facts about electricity
Markets II: Properties of electricity and market structure¶
There’s a certain bare minimum of terms related to electricity required to make sense of the economics. This is really a reminder for myself, who hasn’t studied a hard science since year 11.
Electricity must be generated. Further, electricity is very hard to store, so the supply must generally meet demand rapidly.
Basic terms:
- resistance
- current
- voltage
- resistivity vs resistance and conductivity vs conductance
- load
P = RI*2
Key units:
- power
- energy
- work (units: joules, kilowatt hour)
More terms:
- frequency
- phase
- active power
- reactive power
- apparent power/power factor
Electricity supply chain¶
The electricity supply chain is commonly broken up into 5 parts.
- generation (via power plants)
- transmission
- distribution
- retailing
- dispatching
market structures:
- monopoly (single seller)
- monopsony (single buyer) (independent power producers)
- ownership unbundling
- tolling agreements
- virtual power plants
- wholesale
- key participants:
- Grid operator
- Distribution companies
- Organised by a pool market or a power exchange
- pool market
- uniform price
- central entity matches bids and offers
- spot market or market coupling
- power exchange
- real-time price variation
- price determined through trading, not a central entity
- clearing price determining
- not necessarily a physical exchange
- like a stock exchange
- includes derivatives (futures, options, swaps)
- wholesale +retail