Electricity Market and Energy Economic and Strategic Planning

In economic terms, Electricity (both Power and Energy) is a commodity capable of being bought, sold, and traded. An Electricity Market is a system for effecting purchases, through bids to buy; sales, through offers to sell; and short-term trades, generally in the form of financial or obligation swaps. Bids and offers use supply and demand principles to set the price. Long-term trades are contracts similar to power purchase agreements and generally considered private bilateral transactions between counterparties.

 

Wholesale transactions (bids and offers) in Electricity are typically cleared and settled by the market operator or a special-purpose independent entity charged exclusively with that function. Market operators do not clear trades but often require knowledge of the trade in order to maintain generation and load balance.
 

The commodities within an electric market generally consist of two types: power and energy. Power is the metered net electrical transfer rate. The transfer rate at any given moment is measured in megawatts (MW). Energy is electricity that flows through a metered point for a given period and is measured in megawatt hours (MWh).
 

The market mechanisms introduced a new discipline to be used by power systems professionals. This course explores the market economics and the associated exposure that can be mitigated with financial instruments. The course provides a good understanding of the market structures, the power and energy exchanges, and the hedging instruments that become part of the engineering toolbox. Special attention is given to the identification of Risk Exposure and Mitigation of Risk.