The price of electricity on the wholesale mar
Electricity price on the wholesale market
Many consumers still think that tariffs for utilities, in particular electricity, are set and regulated by the state. In reality, the final cost of energy carriers depends on the market indicator and the limit set by the state, this figure is not constant and changes every month.
The final cost of electricity at retail is affected by:
– energy transportation costs;
– capacity and wholesale price of energy carriers;
– intra-system costs, including vendor surcharges.
Wholesale electricity trade and its features
The main operations with energy resources are carried out on the wholesale market. The unit of measurement for this product is the kilowatt. Each company pays for the amount of kilowatts that were used during the specified period. All consumers make preliminary calculations for the consumption of this product, and place an order for other days. Generators work in a similar way, namely, they provide information about how much electricity they can produce and over what time interval. After analyzing these parameters, the final cost of the product is calculated.
The market primarily sells electricity produced by hydro and nuclear power plants. This decision is due to the fact that these types of energy resources have their own technological nuances, which do not allow calculating the volume of the product produced.
Electrical capacity is an indicator that applies to stations that produce energy resources. In order to produce the set amount of electricity per hour, the equipment must always be in operating mode.
The power indicator is calculated using the following algorithm:
– the operator selects the time interval in which the highest power consumption occurred;
– calculates the average power rating during set hours;
– multiplies the volume of consumption by the cost of its unit fixed on the wholesale market.
Transportation of energy resources is understood as their transfer from the producer to the end customer. The cost of energy carriers directly depends on the voltage received by the client from the networks.
The wholesale energy market is a specialized area of circulation of goods. Its peculiarity is that electricity is a product that cannot be stored, so it must be used immediately at the time of its generation. This aspect creates some restrictions for the free sale of energy resources.
Competitive cost of electricity in the wholesale market
This indicator is formed based on the cost of electricity produced and purchased by the supplier on the wholesale market. The difference between them in the final cost for the customer can vary in the range of 15-30%.
Wholesale prices are affected by the demand for energy consumption and supply in the market. In this situation, there is a direct relationship between the consumption indicator and its value at the set time. The final cost of energy consumption for the enterprise is determined based on the selected work schedule.
For existing enterprises today, the issue of reducing the cost of goods is acute. This goal can only be achieved if energy costs are reduced. Once organizations gain access to the wholesale energy market, they can reduce the price of electricity, and with it the cost of their goods, by eliminating the supplier’s surcharge.
In the wholesale market, the price of electricity is different for all customers. An enterprise that has decided to become part of a wholesale commercial structure may geographically belong to the market segment where the price of energy carriers is lower than that offered by the guaranteeing supplier.
Entering the wholesale energy market will allow you to correctly plan product consumption, which cannot be done when working with a guaranteeing supplier. Even if there are no significant differences between the prices offered by the wholesale market and the guaranteeing supplier, entering the market gives the customer some opportunities to reduce the cost of one unit of capacity.
The decision to enter the wholesale energy market should be made carefully, and only after making preliminary calculations, as well as analyzing the obtained indicators.