In the energy sector, implicit signals are indirect, unforced market signals that influence the behaviour of participants in the electricity system, even though they are not communicated explicitly. They result from market mechanisms, reactions to prices, weather conditions, resource availability and other factors influencing system balancing.
Examples of implicit signals in the energy sector:
- Market prices for energy. Dynamic prices on the energy market (e.g. wholesale or exchange market) can act as an implicit signal for producers and consumers. High prices can encourage an increase in energy production or a reduction in consumption by consumers without the need for direct orders.
- Actions of energy consumers. Companies can adjust their consumption profiles based on variable energy tariffs, which is a reaction to implicit signals. For example, a large industrial consumer can reduce consumption during peak hours when they see an increase in prices on the day-ahead market.
- Balancing and energy flexibility. Power system operators analyse the reactions of market participants to changes in price, voltage or frequency as implicit signals, indicating, for example, the potential for customer flexibility. Some companies automatically adjust their energy consumption based on algorithms that track prices and grid conditions, without the need for additional contracts or direct orders.
- Integration of renewable energy sources (RES). High generation from RES (e.g. from wind or photovoltaic farms) can lead to a drop in energy prices on the market, which is an implicit signal for energy storage or load shifting to hours when energy is cheaper.
- Market mechanisms and system stability. Rapid price changes, emerging transmission constraints or frequent activation of power reserves are also implicit signals indicating potential threats to grid stability.
