Electricity Supply and Demand - Fact Book Electricity Supply and Demand Capacity, typically expressed in megawatts, is the capability to generate electrical power. It is necessary for a system to have reserve generating capacity in case of equipment failure, maintenance shutdowns, or extreme weather conditions that serve to increase demand on the system. Residential users typically pay for energy usage, while some industrial and commercial users pay for both energy consumed and capacity required.
Peak demand occurs when consumers in aggregate use the greatest amount of electricity.
Over the course of a year, peak demand usually occurs on hot summer afternoons and cold winter evenings. The needed energy can come in the form of steam created by burning coal, oil, or natural gas, or by nuclear fission. Gas turbines and internal combustion engines are also used to drive generators directly. Hydroelectric plants use moving water to spin generators. Each of these technologies has different performance characteristics, entails different capital costs, and is characterized by different operation and maintenance costs.