Peak Demand, Installed Capacity and Capacity Margin

For a power system to “keep the lights on”, it needs to be sure there is enough electricity supply available to match demand at any point in time. We’ve seen an example of this, using a variety of different supply options; a “mix”.

In terms of power system planning, this in practice means having enough supply capacity to meet demand in those periods when demand is at or near its peak.

In fact it means having more available supply than that, to cover for either unexpected increases in demand or unexpected losses of supply (due to breakdowns, for example).

The video below is devoted to the issue of peak demand and introduces the concept of a “capacity margin“.

Later we’ll introduce a way of more easily quantifying and visualising the timescales of peak demand episodes in a power system.

Together they highlight that, by planning for peak demand, most power systems have substantial infrastructure (both power plants and transmission/distribution equipment) which is unused or operating well below capacity for the majority of the time. Thus planning to reliably meet periods of peak power demand means significant economic inefficiency at other times.

It also means that on the infrequent occasions that they are used, “peaking generators” need to make enough money to stay in business. They also know that, since you are calling on them, supply must be tight. So peak power is expensive. At times when the balance of supply and demand is very tight, and particularly if you need to call on peaking generators at short notice, prices can spike – I’ve written about this in the past. (That article also gives an example of “negative pricing”, which we mentioned in a previous lesson).