Why do electricity boards have a special cheap price for off-peak electricity?

Answer 1

Too encourage people to use power during of peak periods so as not to overload the system during Peak periods. A good example is of peak hot water. Many people come home from work and have a shower at the same time diner is being prepared and all kinds of apliances get used all at the same time. of peak hot water however gets heated during times when there is not such a heavy load being drawn from the grid. It is also because some of the generation systems used operate continually; it is impractical to shut down a nuclear power station overnight. To make use of the continual power, the power companies try to encourage people to use electricity overnight (usually for storage heating). Supplying in-peak electricity is costly, thus prices are set to incite consumers to shift their load outside peak hours, making off-peak power cheaper. Keep in mind that electricity cannot be stored on a large scale: it must be produced and brought to consumers at the very time it is needed. Here are some of the main reasons for the high cost of in-peak electricity: Transmission bottlenecks: most generating plants are far from cities; if the peak demand is larger than the capacity of transmission lines bringing electricity to cities, suppliers must use closer power generators during peak hours - most often very expensive gas-fired plants. Transmission equipment cost: power lines are very expensive and must be large enough to sustain the maximum peak demand; shifting demand to off-peak hours delays installation of new transmission equipment by electricity suppliers and reduce their operating costs. Off-peak electricity may also be cheaper because some types of generators, like nuclear plants, must produce maximum power 24 hours a day during their entire lifespan; lots of electricity thus gets produced off-peak and must be sold, even at lower prices.