Electricity: The Basics

Vincent Kaminski

This article was first published as a chapter in Energy Markets, by Risk Books.

Each section of this book has started with a discussion of the physical properties of different energy commodities. However, this task is especially difficult for electricity. We cannot see it, we cannot smell it, we cannot touch it – and appeals to our sensory experience break down when we try to describe its movement. We can, of course, touch a conduit transmitting electricity, but this is not a recommended way to study the market. At the same time, it is difficult to think of any energy commodity for which an understanding of the technical aspects of production and transportation is more important in order to avoid nasty market surprises and bad deals. The challenge of explaining certain physical facts related to electricity is that it can be based either on a “trust me, this is the way it is” approach or would require a long dissertation involving complex mathematics. Complex means, in this context, both complicated and making use of complex numbers – ie, numbers containing real and imaginary parts. We have tried to choose a middle road and elaborate on some technicalities. Those who find the