Feuilleton: Brass tacks of electricity price formation
Electricity exchange expert Madis Seppam provides readers with a clear and straightforward overview of how the mystical market price is formed per se.
An hour of electrically heated sauna – €50. Crispy bacon – €2. A cup of hot linden tea – €1. Electricity about to fly off walls.
We have been talking about the Nord Pool and its connection to all economic sectors, while recent record prices might leave consumers with the rather justified question of how are such prices formed? We will now attempt to provide our less than astute readers with a brass tacks explanation.
We all know that the market price is made up of several factors. Some amateur experts claim that the system is not transparent, while the problem is not with transparency per se but rather the number of factors at play between interlinked open competition.
First, we need to understand that it all starts with sources and raw materials that can be renewable and non-renewable. It might not be expensive per se, while the price could be driven up by transport, political tensions where the raw material is mined, logistics etc. Pollution quota trading also affects the price in case you still don't understand, you pillock. Polluting raw materials come with additional expenses.
Next comes production capacity that depends on whether power plants feel like working or whether they incidentally need some maintenance. A shortage of bids could per se create a situation where prices spike, dumbass.
The climate or weather also have a role to play when it comes to renewables; whether the sun is shining, water flowing or wind blowing. A cloudy sky and wind too strong can also drive up prices per se.
Transmission capacity between energy links is another important factor to which we can add successive three-milliohm resistors, divide the result by pi depending on whether Aquarius is in septile between Neptune or Saturn, jump fifteen parsecs, light a candle, recite three Ave Marias, subtract the garlic and beet spread from last Sunday, never sleep again, never sleep again, take the cube root of the result and a double integral based on the atomic mass of arsenic, find the y of the linear equation, decreasingly bubble sort the rompers, find the median, pull our underpants over our head, bite our lip and measure the wind speed, a 5-volt margin of error, the pullback spring falls on the floor, we pick it up and multiply it by e, beat until foaming, split the boson, cook to medium, trapping the juices inside using high heat, varnish the floor, import the necessary databases, call a chimney sweep, what is the meaning of life, create a closed loop, break it with a flamethrower, fertilize using household chemistry, push down the bear's paw, skin the lamb, find the hypotenuse, pi times the square of range, plus three et voila – a €15 quail egg, per se.
Next week, we will get down to the brass tacks of how we could build a new tank for Narva.
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Editor: Marcus Turovski