Capacity markets are mechanisms used to ensure the reliability of electricity supply by providing payments to energy producers for maintaining available capacity to meet peak demand. They complement energy markets by incentivizing investments in generation infrastructure and ensuring grid stability during periods of high demand or unexpected supply disruptions.

Capacity Markets

Reliability of electricity supply

Payments to energy producers

Available capacity

Peak demand refers to the times when the demand for electricity is at its highest, typically occurring during specific periods of the day or year. Managing peak demand is crucial for energy providers to ensure reliability, prevent blackouts, and optimize the cost of energy production and distribution.

Peak Demand

Energy markets are platforms where energy commodities are traded, including electricity, natural gas, and oil, and are crucial for balancing supply and demand while facilitating price discovery. They are influenced by regulatory policies, geopolitical factors, and technological advancements, which can lead to significant volatility and complexity in market dynamics.

Energy Markets

Investments in generation infrastructure

Grid stability refers to the ability of an electrical grid to maintain a continuous balance between electricity supply and demand, ensuring reliable power delivery despite fluctuations and disturbances. It is crucial for preventing blackouts and maintaining the quality of power, involving complex coordination of generation, transmission, and distribution systems.

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