3 ms·

Firstly, the fluctuations happen on a timescale (hours, not days) where price fluctuations don't really have a chance to influence behavior via the market (whic

Firstly, the fluctuations happen on a timescale (hours, not days) where price fluctuations don't really have a chance to influence behavior via the market (which is mostly dealt with the day before). In particular heavy industries which are the bulk consumers, can't typically change their production plans on the hour, while on the other hand a wind front might arrive one hour late or early, causing a huge deviation in the production plan, that must immediately be balanced. And this leads to the second point: There needs to be enough of available balancing power to be able to handle even the worst such deviation to keep the balance, as otherwise a breakdown of the whole system can happen, which would take days to restore from (yea, you can do emergency operations like closing down industries or apartment areas to keep the system from breaking down, but that in itself can have huge economic consequences if nothing else).

bjourne 3y ago
Why wouldn't price fluctuations influence consumer behavior? Electricity is purchased in bulk in Nord Pool whose prices fluctuate by the hour. Consumers, who account for 58% of production, certainly regulate their consumption based on prices. Even industries do and there have been several high-profile examples of paper mills reducing their production due to high electricity costs. Wind availability and temperature is what determines electricity prices, neither of which is particularly hard to predict. Regarding your second point, this is handled via imports and exports and standby capacity. The Nordic power grid is getting denser which reduces the chances of catastrophic failure. While the Swedish right-wing press has predicted brownouts and "electricity ransoning" ever since the right-wing party made more nuclear part of their election platform back in 2020 (what a coincidence...), those dire predictions has not come true.

bjourne 3y ago

Why wouldn't price fluctuations influence consumer behavior? Electricity is purchased in bulk in Nord Pool whose prices fluctuate by the hour. Consumers, who account for 58% of production, certainly regulate their consumption based on prices. Even industries do and there have been several high-profile examples of paper mills reducing their production due to high electricity costs. Wind availability and temperature is what determines electricity prices, neither of which is particularly hard to predict. Regarding your second point, this is handled via imports and exports and standby capacity. The Nordic power grid is getting denser which reduces the chances of catastrophic failure. While the Swedish right-wing press has predicted brownouts and "electricity ransoning" ever since the right-wing party made more nuclear part of their election platform back in 2020 (what a coincidence...), those dire predictions has not come true.