The electricity market faces a unique challenge when it comes to meeting peak demand. Unlike other markets, such as the perishable goods market, where supply and demand are cyclical and predictable, the electricity market experiences unpredictable peaks in demand, often during the evening when people return home from work and turn on their appliances. To meet this challenge, the electricity market can take learnings from other markets that have already solved similar problems. Here are five key learnings that the electricity market can take from other markets:

  1. Establish a physical infrastructure to facilitate the exchange

The perishable goods market has a physical infrastructure that allows for the transportation of goods from their source to their end user. Similarly, the electricity market needs a physical infrastructure that can transport electricity from its source to where it is needed. This infrastructure includes transmission and distribution lines, which are crucial for transporting electricity from power plants to homes and businesses.

  1. Develop a communications infrastructure

To ensure that the electricity market can respond quickly to changes in demand, it needs a communications infrastructure that can quickly transmit information about supply and demand. The SCADA (supervisory control and data acquisition) system used in the electricity market is an example of a communications infrastructure that can quickly and efficiently transmit information about supply and demand.

  1. Implement a storage component

One of the biggest challenges facing the electricity market is the lack of storage for electricity. Unlike perishable goods, which can be stored in cold storage, the electricity market does not have a storage infrastructure that can store excess electricity when it is not needed. Developing a storage component, such as batteries or pumped hydro, could help the electricity market manage peaks in demand more effectively.

  1. Understand the impact of peaks on users

Understanding the impact of peaks on users is crucial for managing peaks in demand. The electricity market can learn from other markets, such as the travel market, which experiences peaks during rush hour, and implement measures such as time of use pricing to discourage usage during peak times. This could help reduce stress on the grid infrastructure and prevent blackouts.

  1. Develop network metrics and definitions

Developing network metrics and definitions is crucial for understanding how the electricity market operates and for identifying areas where improvements can be made. The electricity market can learn from other markets, such as the data market, which has relatively constant demand throughout the day but experiences peaks in the evening driven by internet browsing and streaming. Understanding these usage patterns can help the electricity market develop more effective strategies for managing peaks in demand.

In conclusion, the electricity market can take learnings from other markets to help manage its peak demand problem. Establishing a physical infrastructure to facilitate the exchange, developing a communications infrastructure, implementing a storage component, understanding the impact of peaks on users, and developing network metrics and definitions are all key areas where the electricity market can learn from other markets. By taking these learnings on board, the electricity market can better manage its peaks in demand and ensure a more reliable and sustainable supply of electricity for everyone.