Base Load and Peak Load Pricing

Have you ever thought about how much energy is needed to run your appliances and devices? Well, we did. Each time we flip the switch the electricity demand grows or blows. The price of electricity rates has varied influences, it relies on different factors such as demand, and base load, and peak load pricing.

We use energy in barely everything we do. From keeping us cool, washing our clothes, cook to even clean. In this article, you will learn 3 facts about the base and peak load pricing and will understand how the load is balanced for it to constantly supply electricity.

1. What is “the load”?

Whether you own a small business, live in one small studio, or have a huge mansion, we all have one thing in common when it comes to energy at this time of year: the bills are striking. But why is this happening? We’re running cooling at full capacity in the middle of summer. In the heat, our equipment must work a little harder.

See, you’re not just paying more because you’re using more power; electricity demand is high during the hot summer months. In fact, high demand can result in significantly higher pricing. Hence, the more electricity used at one time, the higher the demand and the harder the grid has to work to meet your needs.

The load denotes the total amount of current drawn by electric devices and appliances. Depending on the electrical components’ nature and how much energy they draw, the load is further classified as base load and peak load. As you may be aware, not all your home’s electrical appliances are always on.

The amount of energy in the power grid is referred to as “the load”. It must be balanced so that the supply can respond to fluctuating and changing demand levels that impact the network. As a result, the load is divided into two parts: base load and peak load. The fluctuations in electrical power demand are caused by external factors such as weather, time, seasons, events, etc, and this fluctuation determines the base load and the peak load pricing.

- Base load characteristics:

Base load is simply the level at that demand typically does not fall below, or the basic amount of energy that is always required. So, since there is a minimum load required during the year, baseload refers to the amount of electricity required to power the minimum demand of energy. In general, baseload is served by “base load powerplants” powered by coal or nuclear energy -Don’t worry we’ll get into it soon. They can meet higher volumes of energy, but it is more difficult to reduce or increase their power capability.

- Peak load pricing:

Peak load is typically a brief period of high demand. In de midst of summer, most air conditioners, are turned on, and in those moments the demand is higher. Peak load pricing is more expensive due to higher demand.

2. Different power plants for different loads

Different types of power plants are used to power different loads. Why? Because some plants are cheaper to run on large amounts and it is also easy to change their power output. Some power plants are more flexible than others hence the difference in peak load pricing. Let’s take a look at this chart:

Base and peak load supply

Source: Nuclear-power.com

We know by now there are different types of sources of energy, those that use fossil fuels and non-renewable resources and those that use renewable ones. We will debrief how – generally – the US electric grid works and understand the different kinds of sources of energy that are used to provide you with electricity.

Let’s look at nuclear & coal plants

Photo: Frederic Paulussen

Nuclear plants are not that easy to operate. In fact, it may take many hours, if not days, for nuclear power plants to start-up or change their power output. Modern power plants can and do operate as load-following power plants, changing the output to meet varying demands. Nuclear plants have traditionally been kept as base load sources of electricity because of their technology.

The same happens with coal plants. They’re great to produce a large amount of electricity but not flexible to increase or reduce their output. They are cost-effective and technically a straightforward mode of operation. Especially because power changes in this mode are limited to frequency regulation for grid stability and shutdowns for safety, that’s it. These plants are typically operated at the near-maximum output continuously.

Peaker Plants

Photo: Kees Streefkerk

Other power plants are only run when there are sudden spikes in the electricity demand. Peak load pricing tends to be higher because the power supply comes at a higher price since they’re not run on a usual basis. Peakers are the last power plants to be turned on and dispatched. When the demand for power reaches a peak, the peakers usually turn on.

Natural gas, a fossil fuel, is the most used energy source for peak power plants. It should be noted that these power plants provide only sporadic energy and are not run always. Another popular source of energy for peak load plants is hydropower. Just to give a fact, hydroelectric plants that can generate the maximum amount of power in 16 seconds. Which is way faster than coal or nuclear-based power plants.

3. How to avoid peak load pricing and start energy saving

To avoid peak load pricing there are many solutions, but first you need to understand what peak hours are:

See, in mild temperatures, peak hours often occur when appliances are in heavy use at night after leaving work. In hot weather, the peak period is usually at night when the air conditioning load is high, or at noon the weekends; During this period, many workplaces remain open and consume electricity. The peak of cold weather is in the morning when space heating and industry starts. In all these times peak load pricing is in use and electricity tends to be higher. Now, without further ado, lets move to the solutions.

  1. Try to not use appliances during peak hours. Check out your utility’s website, they must have a consumption report that can give you some light on when costs are higher than regular. The most important tip to start saving on your energy bill is to reduce the total power consumption during peak hours.
  2. Switch to a fixed electricity rate. Generally speaking, at a fixed rate, the price you pay for electricity is the same for the entire contract period. When you “lock-in” the rates, it doesn’t matter what happens to market base load or peak load pricing rates. You will have stable prices throughout the length of your contract.

At Click2Power.com we can help you with this. We do all the research for you, to make sure you end up with the best energy offer:

  • The best rates
  • Easy enrollment
  • Full control of your costs with fixed rates
  • No Hidden fees
  • Exceptional customer service!

Do you want to learn more about how you can benefit from Energy Deregulation? Feel free to call us now at (833) 680-2025 or fill up the form on our website—one of our energy experts will be willing to help you with all the information you may need!

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