A spot place that allows consumers to purchase and sell gas or electricity in a matter of minutes after the energy is generated. The spot market gives an immediate price for gas or electricity, and prevents contract lengths of time from locking high prices for consumers.
Prices for electricity spot market are determined by supply and demand. If electricity demand is greater than the available supply, the price of electricity increases. If there is a demand for electricity less than the available supply, the cost of electricity will go down.
The graph below shows how the spot market price for electricity changes during the course of the day. The black line shows the average price of electricity for 24 hours. The red line shows how much more expensive or less expensive electricity was in different times of the day.
The blue line indicates the amount of megawatts bought during each hour of the day. The more megawatts purchased within an hour, the higher the cost of electricity that hour.
The yellow line indicates the number of megawatts sold throughout each minute of each day. The more megawatts that were sold in an hour, the lower the price of electricity 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 of the spot market are determined by supply and demand. The greater the number of people wanting to buy electricity, the higher the price will be. However, if more people selling electricity than buying it, the cost will fall. Demand and supply affect long-term electricity prices as well. If there is a surplus of generating capacity, the price of electric power will be less than if there is a shortage of generating capacity.
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 spike during peak hours but then decrease at night.
The reason is the fact that electricity demand increases during the day, and decreases at night. Generators are less efficient in the evening, because people are trying to get to bed early to conserve energy.
Historical Spot Market Prices
Prices of electricity on the spot are determined by the purchaser and seller settling on the price. This strompreisentwicklung is established at a specific time, and not based on the average price of electricity. This means that the prices of electricity in the market can be much greater or less than the cost of electricity.
The reason for this is because the spot market is based upon one transaction. If there are more buyers than sellers, the price will be higher since each buyer is trying to make as much as they can for their electricity. In the event that there's more vendors than buyers then the price will be lower as every seller wants the most money they can to pay for electricity.