The electricity market is a system in which the purchase, sale and distribution of electricity is traded. It is a key sector in the supply of electricity to households, businesses and industry.


In this market, electricity generators produce energy from various sources such as thermal, hydroelectric, nuclear, wind or solar power plants.

The electricity market can operate under different models, such as a regulated market or a deregulated market. In a regulated market, the government sets tariffs and regulates the operation of the market. In contrast, in a liberalised market, competition is encouraged and consumers have the possibility to choose their electricity supplier.

The functioning of the electricity market may vary depending on the country and the market model that has been adopted. Broadly speaking, however, it follows certain common principles and processes.

First, both public and private electricity generators or companies produce electricity from different sources, such as thermal, hydroelectric, nuclear, wind or solar power plants.

Once the energy is generated, the electricity is transmitted through a network of high-voltage transmission lines and cables. This mechanism operated by transmission companies ensures that the electricity arrives safely and efficiently at the points of consumption.

After that process, the electricity reaches the final consumers through low and medium voltage distribution. Responsible for operating and maintaining this distribution network are the distribution companies that have to ensure that electricity reaches households, businesses and other consumption points.

On the other hand, in many of the electricity markets there are also electricity trading companies. These companies are responsible for buying electricity from generators and selling it to end consumers.

Finally, the electricity market price is determined by supply and demand mechanisms.

In short, the electricity market is a system where electricity is exchanged between different actors, establishing prices and conditions for the purchase and sale of electricity.