Manage Your Electricity, Improve Your Bottom Line
This is a common predictable consumption pattern that generators leverage to price energy.
While Generators and Utilities are challenged with managing capacity size, growth and obsolescence, Consumers are challenged with rising costs and dependency on reliable electricity. Regulators world wide have been pushing for improved efficiencies. While energy efficiency reduces consumption during operation, it doesn’t address the fact of rising consumer growth. Growing economies means more disposable cash – of which much is spend on energy consuming products – products that are used intermittently. It is this intermittent load that has created the greatest challenge for utilities for sizing infrastructure for this growth.
In a deregulated market, supply-demand imbalances create opportunity and revenue — just like the stock market. Unlike a stock market, the consumption patterns are relatively cyclical and predictable. And for that reason, supply constrains are also predictable. Because consumer electricity, for the most part, cannot be stored, it must be produced at the time you want it. Depend on the time of day, the cost to produce that energy may be higher as more inefficient generators are dispatched to keep the lights on. That Energy Price is aggregated together based on regionally designed tariffs and market rules. The cumulative cost is then generally flowed through to the consumers. Like other consumer based markets, when there is an oversupply, the price drops. Where there is a tight supply, the price goes up.
Demand Response is typically a program offered by your Utility or electricity Retailer. They monitor the forward market price for electricity and then advise you in advance that they wish to "dispatch" some of your committed load to be turned off during a certain time period — just as if you were a generator producing electricity. Depending on your contractual terms, your participation may be optional or very restrictive. But those that participate are generally compensated.
