Trade · 6 pages · 12 min
How an electricity market is not a stock market
Power markets clear a physical flow that must balance every interval, not a lasting claim.
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From the opening
A stock is a lasting claim on a firm, and the share can sit in an account while the company continues to exist. An electricity market clears a flow of power that has to be produced and consumed in the same moments, on wires that can overload. The opening covers intervals replace lasting shares, location splits the product, and balance is a physical duty.
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Inside
- Intervals replace lasting shares
- Location splits the product
- Balance is a physical duty
- Hedges pay cash, not electrons
- Where the idea stops applying
- A distinction worth keeping
Sources
- Locational marginal pricing
- Real-time power balance