How Electricity Markets Work

Most electricity used in America today is sold on a wholesale power market. These markets are one of the most important institutions structuring the modern U.S. energy economy, but they’re also not very well understood, even in climate nerd circles. And after all: How would you even run a market for something that’s used at the second it’s created — and moves at the speed of light? 

On this week’s episode of Shift Key Summer School, Rob and Jesse talk about how electricity finds a price and how modern power markets work. Why run a power market in the first place? Who makes the most money in power markets? How do you encourage new power plants to get built? And what do power markets mean for renewables? 

Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.  

Mentioned: 

Jesse’s slides on electricity pricing in the short run

Jesse’s lecture slides on electricity pricing in the long run

“The duck curve”

Shift Key Summer School episodes 1, 2, and 3

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This episode of Shift Key is sponsored by …

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Music for Shift Key is by Adam Kromelow.

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