Did you know that you might be billed based on your peak or off-peak electricity usage if you’re on a variable rate electricity plan? Most of us believe energy has the exact cost all year round, with some highs and lows depending on our consumption. Truth is, that’s the case with fixed-rate power plans, but it isn’t everyone’s case. Suppose you’ve never changed your electricity supplier. In that case, you’re most likely billed on a time-of-use contract that charges more for power during hours of peak electricity consumption but provides cheaper service during off-peak hours.
We will go over how the US electric grid works in general and the many types of energy used to provide you with power.
Source: Photo by Nikola Johnny Mirkovic on Unsplash
1. What is peak electricity usage?
Have you thought about how does energy comes to you? To turn on the lights, or just to allow you to read this, your electricity must go through a long journey, from its generation in the power plant. The cost of power fluctuates every day and hour depending on the price of electricity in the wholesale markets.
Electricity and natural gas price increases have piqued the interest of many in the media, but they have also taken many people off guard, resulting in significantly higher energy bills. Those high bills come from higher demand for power and a higher price due to the relation demand-offer on the load.
2. What is the electricity load? How does it work?
The entire amount of current drawn by electric gadgets and appliances is referred to as the load. The load is classed as baseload or peak electricity load, depending on the amount of energy consumed at a certain point. “The load” refers to the quantity of power in the electrical system. It must be balanced for the supply to adapt to the network’s fluctuating and changing demand levels.
As a result, the load is split into two categories: base and peak electricity-generating companies. External variables such as weather, time, seasons, events, and so on produce oscillations in electrical power consumption, which define the baseload and peak load prices.
3. What power plants generate electricity on each side of the load?
To power, various loads, many types of power plants are employed. Why? Because certain plants are less expensive to produce large quantities of energy and are also simple to vary their power output. Peak electricity price varies because certain power plants are more flexible than others. We now understand that there are two sorts of energy sources: those that use fossil fuels and non-renewable resources, and those that use renewable resources
• BASELOAD POWER PLANTS:
Nuclear power facilities are not straightforward to run. In reality, nuclear power facilities may take several hours, if not days, to start up or modify their power output. Modern power plants may and do function as load-following power plants, altering outcomes to suit different needs. Because of their technology, nuclear power plants have typically been used as baseload providers of electricity.
The same is true for coal-fired power facilities. They are excellent at producing a considerable quantity of power, but they are not adaptable in increasing or decreasing production.
They are a low-cost and technically simple way of operation. Especially since power adjustments in this mode are confined to frequency management for grid stability and safety shutdowns. These plants are often run at near-maximum production continuously.
• PEAK ELECTRICITY PLANTS:
Natural gas, a fossil fuel, is the most often utilized energy source for peak electricity plants. It should be noted that these power plants only supply intermittent electricity and are not constantly operational because they’re far more expensive to activate. Hydropower is another prominent source of energy for peak electricity load plants. For example, hydroelectric facilities can create the maximum amount of power in 16 seconds. This is far quicker than coal or nuclear power facilities.
4. What happens in the wholesale electricity markets?
Wholesale markets describe the many organizations or institutions involved in generating, distributing, and selling energy. Various organizations first arrived on the market as a result of deregulation energy procedures. The energy distribution sector imposed a working dynamic, a roadmap, by structuring three top levels of manufacturing, distribution, and power supply companies.
The electric grid has been almost entirely dependent on centralized infrastructures, such as substantial power plants and long-distance transmission lines, for over a century. Energy efficiency, demand response, energy deregulation, distributed generation such as rooftop solar, distributed storage such as batteries, smart thermostats, and other technologies are changing the power market landscape and influencing peak electricity usage.
Before, a consumer was only entitled to one power supplier based on his location, and that was it. It has evolved in response to new technology and socio-economic advancements. Right now, customers have the power to choose the energy supplier of their preference, but let’s see what the three actors are:
• GENERATORS OR POWER PLANTS
Power generating firms own and operate facilities that generate power. All power plants are included in this category, including coal, nuclear, natural gas, and renewable energy sources such as wind and solar.
• RETAIL ENERGY PROVIDERS (REPs)
These companies sell electricity to residential and business clients, offer several plan pricing and options, and buy and sell power in the wholesale market and resell it to final customers. Right now, different suppliers offer a variety of energy plans at competitive pricing, including programs that use 100% renewable energy.
• TRANSMISSION AND DISTRIBUTION UTILITIES (TDUs)
Source: Photo by Andrey Metelev on Unsplash
These corporations oversee delivering power to all residences and businesses within a service region. A Transmission and Distribution Utility (TDU) is responsible for the ownership, maintenance, and repair of all cables, wires, poles, and meters in its service region.
5. What are the main types of electricity rates, and how are they affected by the electricity load?
There are two central rates for electricity:
- The fixed-rate electricity plans, where the price of power is always the same, and the costs on your bill depend merely on your consumption. They’re not affected at all by the surge in the load’s power demand, making it easier for you to budget around.
- The variable rate energy plans, where the main actors are peak electricity hours and off-peak electricity. At this rate, the price changes depending on the time of day. There are usually 8 off-peak hours where the price is lower (at night and/or in the middle of the day) than during hours with peak electricity usage. As you can see, they rely on the market situation and on your consumption, making it harder for you to control your expenses.
At Power Choice Now, we help you find the electricity rate that works best for you, depending on your consumption habits and needs. You just need to enter your zip code and answer some questions regarding your consumption. We’ll then come with the best electricity rates that match your profile; you have the power to choose your energy supplier, enroll in a couple of clicks, and start saving on your energy bills from day one.