It is an electricity market in which consumers can buy and sell gas or electricity in a matter of minutes after the energy is generated. The spot market gives the price of gas or electricity, and prevents contract lengths of time from locking costly costs for consumers.
The prices of electricity on the spot market are affected by demand and supply. When electricity demand is greater than the available supply, the price of electricity goes up. When there is a demand for electricity less than the supply available, the cost of electricity goes down.
The graph below shows how the price at the market for electricity changes throughout the day. The black line shows the average price for electricity for 24 hours. The red line shows the amount of expensive or less expensive electricity was in different times of the day.
The blue line shows how many megawatts were purchased in each hour of the day. The more megawatts that were purchased within an hour, the more expensive the electricity cost was that hour.
The yellow line represents the number of megawatts sold during every minute of each day. The higher the number of megawatts sold per hour the less expensive the cost of electricity was that hour.
The prices of electricity in the spot market differ from demand and supply since this market where electricity is traded between sellers and buyers. The prices in the spot market will be determined by supply and demand. The more people who want to buy electricity, the higher the cost will be. Conversely, if there are more consumers selling electricity than buying it, prices will fall. Supply and demand also affects long-term electricity prices. If there is an excess of capacity to generate electricity then the cost of electric power will be less than if there is an insufficient capacity to generate electricity.
Electricity spot market prices differ according to the amount of electricity being traded. The chart below shows the average price of electricity spot markets for a 24-hour period. Prices rise during peak times, and drop off in the evening.
The reason is the fact that electricity demand is higher during the daytime and then decreases at night. Generators operate less during the evening as people try to go early to sleep to save energy.
Historical Spot Market Prices
Prices of electricity on the spot are determined by the buyer and seller coming to the price. This strompreisentwicklung is established at a specific time, and not based on the average price of electricity. This means that prices in the spot market may be greater or less than the average price of electricity.
The reason is that spots markets depend on one transaction. When there is a greater number of buyers and sellers the price will be higher due to the fact that each buyer wants to get as much money as possible for their electricity. In the event that there's more vendors than buyers the cost will be lower as every seller wants the most money they can for their electricity.