| Abstract: | For more than a century, we have accepted the premise that once electricity is produced, it cannot be stored. This lack of storage causes extreme electricity price volatility (compared with other commodities) and hourly fluctuations in wholesale market prices, and has prompted specialized real-time markets that provide price fluctuations in 5- or 10-min intervals. The hourly volatility reflects the widely disparate costs of production from different resources that lead to a steep supply curve in most markets; that steep supply curve, coupled with highly variable demand and an inelastic demand curve in today's markets, makes for high volatility. |
