Chances are you turned a light bulb on or off today. You probably charged your mobile device as well. Perhaps you watched a little TV or made some coffee. That’s all thanks to your home’s connection to the power grid. But there’s a lot that happens before the power gets to your home.
First off, a power grid is the most extensive electrical control system on the planet. The US runs two types of power markets – the regulated and deregulated electricity markets. These markets are responsible for coordinating, controlling, and monitoring the operation of the power system.
What is the Difference Between Regulated and Deregulated Electricity Markets?
The regulated market consists of electric utility companies, or simply utilities, that function to generate and deliver electricity. They own the infrastructure and transmission lines, and consumers buy electricity directly from them. Utilities in regulated markets are under the state’s control, and the state public utility commission sets electricity rates.
The deregulated power markets, on the other hand, are primarily filled by Independent System Operators (ISOs). ISOs are formed at the direction of the Federal Energy Regulatory Commission (FERC). ISOs are created to coordinate, control and monitor the electric grid of the state or states that fall under it. ISOs are deregulated since supply and demand economics drive prices. They also act as a marketplace for wholesale power – meaning that many entities can buy or sell power from a day to several years in advance for delivery at a fixed point.
What Makes the US Power Grid Work?
In general, a power grid consists of three main parts – generation, transmission, and distribution.
The point where power is produced, which is done using various sources. In the past, power was mainly obtained from coal. With technological advancement and development, we now get power from sources like wind, nuclear energy, the sun, water and natural gas.
Transmission lines – large cables of wire spanning long miles across states – transport the power. These lines are designed to increase the voltage of power during transmission, making transmission faster and easier. The US has transmission lines spanning more than 4,000 miles across the country.
The point where power is delivered to you at home or work. Distribution lines take power from the transmission lines to energy end users. Distribution lines reduce the high voltage power on the transmission lines to a level appropriate for consumption.
How Do Power Companies Check and Balance Voltage Consumption?
The power grid is controlled and influenced at each end of the process.
The user controls the grid by using power. When you turn on any appliance or machine at home or in a business, the grid shifts to distribute the required power to you while also automatically balancing itself. When many homes and businesses do this simultaneously, the grid rallies the power to the points of need and finds a balance in itself.
The generating company controls the grid using prediction algorithms and analysis. During peak energy times — for example, festive periods like New Year’s Eve, big sporting events, during elections or other special occasions — power generators understand that the power demand will be high. The generating company will increase its production and output based on an analysis of what they think the demand will be.
What Challenges Do Generating Companies Face?
ISOs and utilities face various challenges. Most importantly, their choice of the source of power generation largely depends on the output the source can deliver. Solar power generation, for example, is dependent on the sun, wind energy on the wind, hydropower energy on the seas and water levels. When there is a deficit of these natural sources, there is a deficit in production.
Most generating companies have to work with multiple sources of generation to account for this variability in supply. They cannot rely on just a natural source to meet special demands. You cannot analyze the demand structure and rely on just the wind or sun to provide power. Say a football match is to happen at night when there is no sun, it becomes difficult to deliver the required output if the company is reliant on solar energy alone. The stable alternative that most generating companies currently rely on and use is natural gas, which is known as a green, clean, effective, and reliable source of electricity.