How do electricity markets work and why are they supposed to be economically efficient? How do they make sure that demand for electricity is (almost) always met? How is the price of electricity determined? How do producers decide which plant to run and how much to produce? How do they make investment decisions?

Many questions! But hopefully, after this subsection you can confidently answer them all!

This subsection has three videos:

• Market basics.
• Power exchanges
• Long-term bilateral markets.

Market Basics

Electricity can hardly be stored and therefore, it needs to be produced when it is needed. How can this be realized? How can we (almost) always ensure a reliable and affordable electricity supply?

This lecture will help you to understand the basic principles of electricity markets.

Power Exchanges

A large share of short-term electricity trade is facilitated by power exchanges.

How do they work? How do they ensure that demand is always met at the lowest cost? How do suppliers decide which plants to operate and at what price, and how do they recover their investments?

Check out this lecture to find out!

Bilateral Markets

Short-term markets involve several sources of risks for market participants: prices are difficult to predict and the recovery of fixed costs is uncertain. How can these risks be reduced?

Long-term bilateral markets are a safer alternative. How do they work? And what are the differences to short-term markets? Let’s find out!