01 May Price volatility vs savings opportunities
Electricity prices are determined hourly and can be volatile, as the chart shows for two weeks in December 2014, compared to historical minimum, mean and maximum prices from 2002 to 2015.
The days to watch in these two weeks in 2014 would have been Tuesday, December 9, and Friday and Saturday, December 12 and 13. In all the other hours of this two-week period, only those 3 days had prices above average. But on those days, the price was double what it was the rest of the time. In a dynamic market, timing is everything.
Electricity market dynamics
Marginal cost sets price of energy in real-time market, drives grid balancing services
Policy and regulatory
- Peak energy management
- Demand response incentives
- Capacity auctions
- Utility rate structures
- Metering and control systems
- Variable loads
- Energy storage
- Standby generation
HOURLY PRICING OPPORTUNITY
Price varies with total system electricity demand, and fuel costs. Prices are higher in summer and winter, lower in spring and fall. Your facility load varies from hour to hour, based on working hours, operations and processes, as well as ambient conditions. Most customers consume more during extreme temperatures, peak operating hours, and during system peaks. Reducing consumption strategically during these hours avoids paying the highest prices in the market.
CRITICAL PEAK OPPORTUNITY
Some customers pay monthly amounts based on a peak demand factor, calculated as the percentage of their demand during the highest hour of 5 the highest system peak demand days. For this customer class, the benefits of demand management and response during system peak hours are significant.