Electricity market trading

This article was written by:

Professor Emeritus Lou van der Sluis

Emeritus professor Lou van der Sluis

Published on November 12, 2024

The rise of renewable energy sources such as solar and wind is having a major impact on the electricity market. Electricity generation used to be predictable and centrally regulated, but now this market is dominated by many players competing in different ways. This leads to dynamic electricity trading, with companies constantly trying to make the best deals to minimize their energy costs and maximize their profits. But how can companies prepare for the unpredictable nature of renewable energy?

electricity market Energy storage power station BeeBeeOne

Electricity market trading refers to the buying and selling of electricity between different parties, such as power producers, suppliers, industrial users and brokers. This market functions on the basis of supply and demand and plays an essential role in the efficient distribution of electricity within a country or region.

From centralized to decentralized market

Until recently, electricity production was centrally controlled by large energy companies that managed both generation and the grid. With the breakup of these companies and the liberalization of the market, a system has emerged with many competing parties. This has completely changed the dynamics of the electricity market. The goal is no longer to minimize costs centrally, but to maximize revenues for each participant.

Responding to an unpredictable market

The transition to renewable energy sources such as solar and wind has brought about an important change. This is because these sources are less predictable than conventional energy sources such as coal or gas. Electricity cannot be easily stored, which means that production must always respond immediately to demand. This requires smart strategies to quickly match supply and demand. Especially in the short term, this plays a crucial role, as companies only know how much wind or solar is available just before use.

Long- and short-term decisions

Companies in the energy sector must constantly make decisions about buying and selling electricity, both long-term and short-term. Long-term contracts offer stability, but it is mainly short-term trading that is becoming increasingly important. In the short term, for example, weather forecasts, such as high winds or lots of sunshine, can make a big difference in the price and availability of electricity. This offers companies an opportunity to take advantage of favorable conditions by responding quickly to changes in generation.

The role of spare capacity

In addition to regular electricity trading, spare capacity trading also plays an important role. Reserve capacity consists of equipment that is on standby to turn on quickly when there is a shortage of electricity. This is essential for maintaining grid stability. Energy companies make money by making this spare capacity available, for example, when another energy source fails unexpectedly.

The future of the electricity market

Renewable energy will only become more important in the future, and electricity market trading will continue to change with it. Companies that invest in green energy generation, such as wind turbines and solar farms, will have more flexibility to take advantage of variable electricity demand. On the other hand, companies without their own renewable generation will become more dependent on the market, making them more vulnerable to price increases during periods of low generation.

BeeBeeOne’s contribution

Innovative energy storage systems like the BeeBee 735 allow companies to efficiently store and release their electricity as needed, allowing them to better respond to fluctuations in the market. The combination of electricity and thermal storage makes BeeBeeOne’s technology particularly valuable in an unpredictable market that increasingly relies on renewable resources. Through these solutions, BeeBeeOne plays a crucial role in ensuring the stability and efficiency of the electricity market while contributing to a sustainable energy future.

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