From Science Daily:
Between 2000 and 2001, California experienced the biggest electricity crisis in the U.S. since World War II. Exactly how it happened, however, is complex. New research now reveals insights into the market dynamics at play, potentially helping regulators standardize the market and prevent future crises.
An energy market is complicated because electricity must be generated and distributed in real-time — all under the constraints of existing infrastructure, reliability requirements and physics. Despite a confluence of factors affecting supply and demand, and thus the price of electricity, the energy demand on the grid is usually correlated with the price in a normal market. But in 2000, when electricity prices in California spiked to $1,200 per megawatt-hour (several tens of times the average price at the time), the price was no longer correlated strongly with the energy load.
To analyze what happened, Fang Wang of Hunan Agricultural University in China studied the differences between the normal market in 1999 and the one in crisis during 2000. Wang explored the relationship between prices and energy loads before and during the crisis, developing a new statistical measurement to quantify the asymmetry in how the prices and loads were correlated.
If the correlation is different when the prices are increasing compared to when the prices are decreasing, then the correlations are asymmetric. Understanding this asymmetry, Wang says, reveals deeper insights that explain why the correlation between prices and loads differed before and during the crisis.
“The results from this work uncover the truth of the…