Why is energy “cheaper” at night? Doesn’t nuclear, coal, hydro, etc all cost the same to produce no matter what time of day? Demand shouldn’t factor into cost.
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It costs the same to produce the energy, but with the lower demand, there is less competition for the resource availability.
Energy needs to be produced at roughly the rate at which it is used, to avoid needing to store it – which is costly. 1000 kv produced = 1000 kv used.
Storage systems fail and need maintenance and replacement.
During peak usage times, production facilities are at capacity, and energy is drawn from various storage mechanisms, as well. 1000 kv produced, but 1200 kv in use.
During low usage periods, production facilities reduce output, and still work at topping up storage, for use during peaks. 1000 kv produced, 600 kv used, 350 kv stored, 50kv of transmission based loss.
This storage of excess production necessitates transmission of the excess energy over the grid from production facility to storage facility, then again across the grid for end use again at a later time.
Each of these transmissions involves some loss, driving the price up during peak times both for compensation for the multiple losses incurred during repeated transfers, as well as the wear and tear experienced by the hardware, etc. for multiple uses of the grid and increased risks of transmission failure, for limit loading of components, during peak times – which just isn’t a risk during periods of lower usage.
I.E. the transmission grid is at significantly lower risk of overload, during non – peak operation. Overloading “the grid” is a reality, and higher risk of occurring during peak usage.
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