n SA Mercantile Law Journal = SA Tydskrif vir Handelsreg - Electricity market restructuring : perspectives from abroad

Volume 26, Issue 3
  • ISSN : 1015-0099
  • E-ISSN: 1996-2185



Electricity has been variously described as 'fungible', 'homogeneous' and 'totally undifferentiated' - the product is completely indistinguishable in that all electrons are identical. It varies in value according to time and place - power is much more valuable during peak time on a congested grid than during off-peak hours when there is ample supply in relation to demand. Demand varies wildly from hour to hour and from day to day over the course of a year. The flow of electricity cannot be directed: it flows according to Kirchoff's laws and takes (literally) the path of least resistance. In other words, '[e]lectricity is transmitted between different locations by a network according to the laws of physics, not the contracts between generators and buyers'. There is therefore no direct physical relationship between an individual generator and an individual consumer and a fiction is used to ascribe the flows accordingly. Furthermore '[e]lectrons do not know when they have crossed a state or provincial boundary' but governance becomes harder when electricity crosses political boundaries, as it becomes necessary to accommodate potentially conflicting political preferences. Since it 'travels around the AC grid at the speed of light', it becomes 'impossible to predict where a particular power plant's output will go at a particular point in time'.

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