It’s always an interesting discussion with non-technical people involved in contracting for power supply. Energy contracting is oftentimes the responsibility of personnel who are not familiar with the price dynamics of the power markets. The conversation will typically start with “we use a lot of electricity…..we should see a great price”. While that may be true, it’s not necessarily the magnitude of usage that drives the price, but the consistency and level of demand. What’s the difference between demand and usage? Power demand is the amount being drawn from the grid at any point in time; usage is the aggregate of demand across time. A consistent or flat demand profile, meaning a higher load factor, will command a better price than that associated with a low load factor. So why is that?
