Knowra Electricity market Electricity market An economic system for producing, buying, selling, and delivering electrical energy. Its design must coordinate supply and demand continuously because electricity is difficult to store at grid scale.
Merit order : A ranking of power plants by their short-run costs, used to determine which units are dispatched first. Wholesale markets often dispatch generators in cost order, shaping which plants set prices.
Electric power system : The interconnected infrastructure that generates, transmits, distributes, and uses electrical energy. Market transactions take place within this physical system and cannot ignore its operating limits.
Wholesale electricity market : A market where generators and other suppliers sell electricity to utilities, retailers, or large consumers. It is the market layer where large-scale generation is scheduled and priced.
Vertically integrated utility : An electricity company that owns or controls generation, transmission, and distribution within its service area. It coordinates these functions through regulation or internal planning rather than competitive wholesale trading.
Resource adequacy : The ability of an electricity system to meet expected demand with sufficient available resources. Market design must encourage enough dependable supply to cover peak demand and contingencies.
Locational marginal pricing : A method that prices electricity at each grid location according to the cost of serving one additional unit of demand there. It exposes how congestion and transmission losses make electricity prices vary across the grid.
Electricity storage : Technologies that convert electrical energy into a storable form and later return it to the grid. Storage can shift supply across time, easing the market’s need for instantaneous balance.
Retail electricity market : A market in which electricity suppliers sell power and related services to end-use customers. It determines how wholesale costs and retail competition reach households and businesses.
Cost-of-service regulation : A regulatory approach that sets utility rates to recover approved costs and provide an authorized return. It contrasts with market-based prices as the principal means of coordinating electricity investment and sales.
Electricity price volatility : Frequent or substantial changes in electricity prices over time or across locations. Short-run scarcity, fuel costs, and variable generation can produce sharp market price swings.
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