Electric capacity refers to the total amount of electricity generation available for consumption at any given moment. As electricity demand continues to grow and energy policies evolve, understanding and managing electric capacity becomes increasingly important.
Electric grid operators have established capacity markets to incentivize generators to produce adequate power to meet consumer demand reliably. These markets are designed to ensure that sufficient capacity is available to avoid power shortages that can lead to blackouts, reliability issues, and challenges in supporting future growth.
However, maintaining reliable electric capacity is becoming more complex. In 2023, approximately 60% of electricity generated from utility-scale sources came from fossil fuels, including natural gas, coal, and petroleum. Renewable energy sources like wind, hydro, and solar accounted for 21%, while nuclear power made up the remaining 19%.
Laws restricting emissions and evolving energy policies are reshaping the mix of power generation sources. Many states are choosing to retire older coal, natural gas-fired, and nuclear plants and replace them with greener alternatives. While this transition supports sustainability goals, it also contributes to rising costs associated with the remaining capacity.
Unlike traditional fossil fuel and nuclear plants, which provide consistent energy output, many green alternatives such as wind and solar energy introduce variability into the market. This variability adds complexity to capacity management and requires careful monitoring to ensure grid reliability.
Electricity demand continues to rise, especially during extreme weather conditions in the hottest and coldest months. As natural gas is increasingly relied upon for both electricity generation in the summer and home heating in the winter, the strain on the grid intensifies. Severe weather events can further push the grid to its limits, increasing the risk of blackouts if sufficient power is not available.
At Power Management, we actively monitor the capacity market nationwide to help businesses manage the costs associated with electric capacity. Our expertise ensures that you can navigate the complexities of capacity management and maintain reliable energy solutions tailored to your needs.
Contact us today to learn how we can assist your business in managing capacity costs and enhancing energy reliability!