Wholesale electricity market. Generating companies of the wholesale electricity market

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

In 2003, the system of the wholesale electricity market underwent significant changes. The reason for this was the adoption of the relevant law, according to which the reform of this industry in the state was carried out. The main goal of the changes was to replace the many small companies providing a variety of services - from production to sales, with three large ones. They, in turn, should specialize in only one direction:

• production;
• transportation;
• sales.

Thanks to this, a unified network appeared, which included the nuclear concern Rosenergoatom, which is important for the country. This reform made it possible to bring the energy industry to a fundamentally new level and make it one of the leaders in the Russian economy.

Specificity of electricity as a commodity

The wholesale electricity market trades a very important resource. And since this product has rather specific features, some points should be taken into account when regulating the market. The main distinguishinga feature of electricity as a commodity is that all stages of movement must occur alternately and without delay. Energy cannot be stored and accumulated. This type of product immediately after production should instantly reach the end consumer.

Manufacturer's control is possible only in terms of delivery volumes. But for people it is absolutely unimportant which company generates electrical energy, because after its reproduction it enters the general network.

Generating companies of the wholesale electricity market are well aware that their product is included in the category of essentials. The population is very sensitive to sudden changes, jumps or lack of this product. Only in extreme cases can people replace a centralized source with an autonomous station or gas heating. For this reason, supplies must be reliable and uninterrupted.

Also, when generating electricity, the ratio between the production plan and the consumption forecast is taken into account. It should be as balanced as possible so that there is no imbalance.

Market regulation methods

The wholesale electricity and capacity market is highly dependent on the way government regulates it. The specific mode of regulation, in turn, is selected according to the relevant factors:

• type of state economy;
• property type;
• a way of government intervention inindustry development.

Direct state management of the industry

In the case of direct management of the industry, the wholesale electricity market is subject to the influence of the state through its bodies, such as ministries. The state apparatus directs the work of the industry and all its enterprises. The state directly decides the quantity and volume of supplies, sets the cost and direction of investment of profits. That is, virtually all the work of enterprises in the energy sector (including the price of electricity on the wholesale market) is under control from above. This method is quite tough.

Public administration of an industry through a state corporation

When governed through a state-owned corporation, the state also has a significant share of influence over the industry. Is that the management itself is carried out through a specially created corporation. Although this organization works in the interests of the country, it has a certain independence and autonomy in decision-making. This makes it possible to manage the energy sector more carefully, get more profit and organize the process as efficiently as possible.

State regulation and supervision of the industry

This method of industry regulation is used in the most democratic countries. If all the players in the market are private traders, then this is the best way out. The advantage of this method is complete independence. But not everything falls on the shoulders of privateentrepreneurs. Licensing, regulation of activities and security is the work of the state. It also deals with pricing and tariff setting. Uniform rules are also being developed that are mandatory for the production, transmission and distribution of energy.

Forward market

The way the wholesale electricity market is organized affects not only the efficiency of its development, but also the entire industry as a whole.

The first type of organization of the wholesale electricity market is the forward market. Its essence lies in the supply of products under pre-contracts. The activity of the forward market is carried out on the basis of bilateral contacts, the conclusion of which is carried out directly by the seller and the buyer of the goods. There are several ways to move electrical energy. The first is the execution of a transaction between the producer and the consumer. The essence of the second type of contract is the resale of products. The conclusion of the third takes place on the corresponding exchange, which deals with forwards.

The advantage of this market is its reliability and safety, because it insures both parties in advance against possible force majeure circumstances. Physically, the implementation of the contract will be completed only after the formation of the daily schedule. This is another plus, because you do not need to spend much effort on organizing the work of the market.

Day Ahead Market

The trading system of the wholesale electricity market is predominantlydetermines the quantity and delivery time in advance. But since the goods can be moved using various methods, it is quite likely that unforeseen hitches will occur. However, this problem is solved quite simply. For this, temporary warehouses are organized. Also, this issue can be regulated with the help of economic levers (for example, an advance increase in cost). However, the coordination of supplies for the electricity market is specific. The main distinguishing features of such a market are the instantaneous transmission and consumption. For these reasons, planning for the movement of energy is very important for the sustainable operation of the grid.

The operator coordinates the operation of the system, who determines how much, when and to whom to bet. His job is to draw up a schedule for the movement of electrical energy. The level of satisfaction of all market participants depends on the accuracy of this plan. Therefore, the operator also takes into account the throughput of sections of electrical networks. Correct calculations will help eliminate the possibility of overload, while using the full capacity of the lines.

Usually the day the operator finalizes the daily schedule is the day before the trading day. The worker contributes to the emergence of a whole market. It is this method of organization that is called “a day ahead.”

Real Time Market

The wholesale electricity market is characterized by its inaccuracy, because it is very difficult to accurately predict the volume of supply. quite possiblesome deviations from what was written in the contract.

It often happens that in one place there is a lack of energy, while in another, on the contrary, surpluses appear. In any case, they do not balance each other. If the amount of imbalance is significant, then this can lead to failures in the system. Therefore, the operator is engaged in the regulation of supplies.

The real-time market allows you to make the system more balanced by trading its participants with their imbalances.

Generation companies

There are currently seven large companies operating in the Russian Federation. They interact with each other, and their network is thus the wholesale energy market. The main objects of the system are thermal power plants. All of them are grouped into six associations. On average, the power of one such group is nine gigawatts. The second generation company of the wholesale electricity market deals with the regulation of hydroelectric power plants. It is called RusHydro. The wholesale market accounts for a third of the country's generated energy.