When is electricity like a rock concert? Costs go up when there is a big demand for tickets (or electricity). Both industries respond to peak demand from customers by using more resources.
Let’s say a musician plays a small club holding maybe 50 people. The microphone and speakers are on site, or the singer brings them. Easy set-up, easy clean-up. Low maintenance. When the same musician plays to 50,000 that is a different venue. More resources are needed to accommodate a larger group. More people (security, ticket takers, ticket sales, electricians…), more infrastructure (big speakers, more sophisticated microphones, seating, bigger stage, more restrooms…).
The same music costs more when more people want to hear it on-site at once. More resources are needed to get the show on the road. Either that or reduce the number in the audience, maybe get a smaller arena so costs are reduced. Then, some people do not get in the show.
Doesn’t sound like electricity at all, but it is. When a lot of people want electricity at once, like when it is really hot or cold, more electricity has to be made. More resources are needed to make it. More power plants have to crank up and may not be as efficient as other plants in use; they cost more. Or, more power is purchased from other utilities on the open market (if it is available) and can cost more in a high-demand market.
Electric bills do not necessarily go up immediately even when the power company must use more resources. But the added cost are there. Whether electric costs go up depends on the rate structure for each company and customer. Some customer accounts are “time of use” rates – the rate depends on when the power is used. In the industry, “C&I” rates (commercial and industrial) can offer a company an economic incentive to allow power to be interrupted during high-demand times.
Let’s dig in a little further. In the electric business the load is the amount of energy a system is using at any given time. Base load is the amount of power made by an energy producer to meet basic demands by consumers – what it takes as a minimum to operate our society. When requests for more electricity are at their high points, that is called peak demand for electricity (more than base load). More load needs more resources.
Instead of using more electricity when there is peak demand, consumers can shed load, in other words,
reduce the amount of electricity that they use and, therefore, the extra resources a power company needs to make electricity. Industrial users sometimes shed load as part of their energy management processes.
Households can also shed load in peak demand times, too, by modulating their heating and cooling to use less energy, turning off lights, pool pumps, and not using washing machines. Or, in some places, households work with the local electric producer to allow the company to limit availability of electricity during peak demand times.
Utilities in the Carolinas have web pages that discuss saving energy: Duke Energy has a Power Manager program, SCE&G has a rebate program, Santee Cooper has energy-saving equipment programs, Dominion has pricing plans from home and businesses for its NC customers. People who get energy from a co-op or other system should check with their provider. For example, here is Fairfield Electric‘s (near Columbia) page about its “Beat the Peak” program. SC Co-ops have an overall Beat the Peak page here. Here’s the page for Blue Ridge Energy in Lenoir, NC. The links here are just to get started in your research. These savings ideas differ by company and location.
Whether it is a business or household responding to peak power, this shows that the electric industry has a lot of moving parts that have to work together. Peak demand is a useful concept for consumers to know because they can affect the cost of their electricity by how much they use. Consumers have a lot of control when they balance their energy use. Rock on!
Check our earlier column about the “duck curve,” it is also a story about electricity demand.
A McKinsey study looks at electric vehicles and their impact on demand. The potential impact of electric vehicles on global energy systems. From the report: “While the uptake in EV sales is unlikely to cause a significant increase in total power demand, it will likely reshape the electricity load curve. The most pronounced effect will be an increase in evening peak loads, as people plug in their EVs when they return home from work or after completing the day’s errands.”
Texas had a major heat wave in July and media outlets covered the vent. Amid heat wave, ERCOT posts new July peak demand record. Short, basic explanation.
Duke Energy Carolinas customers set new all-time peak record for energy use explains its January 2018 record.
Demand for electricity changes through the day. Energy Information Agency.