The difference between electrical energy and electrical capacity
Electrical capacity, which is measured in kilowatts (kW) and electrical energy, which is measured in kilowatt hours (kWh), are very i mportant concepts for understanding electricity markets and how electricity tariffs are calculated.
To make things easier, think of a car in which the speedometer measures the pace of the trip (or speed) in kilometers per hour and the odometer measuring the total kilometers. In this case, the car’s speed is proportional to the electrical capacity and the total kilometers are the amount travelled being proportional to the total consumption of electrical energy (electricity).
For a better understanding we can compare an electrical system with an irrigation system consisting of pumps (electric generators) and water pipes (electricity lines or cables).
The irrigation system serves a large number of plants (consumers) where daily watering is required with a certain amount of water for each separate plant at random time periods. The process begins in the morning with the watering of the first plant by opening the specific valve (switch), the pumps start generating water flow (electrical capacity) so that a sufficient amount of water (electricity) reaches the plant.
When a second plant needs watering at the same time, then the valve opens so that the pumps increase the flow of water (if necessary, an extra pump will be put in operation) to be able to satisfy the total amount of water for watering both plants.
During the entire day, the pumps will regulate the flow of water in the irrigation system so that the required amount of water is pumped so that the plants will be watered.
Of course, there should be enough pumps to provide water even at the most busy and demanding hour (maximum demand).
That is, they should be able to create the maximum flow of water in the event that all the valves to the plants are open so that there is a seamlessly satisfactory amount of water in all plants.
Since each plant’s valve opens and closes at random hours (e.g., by measuring the moisture in the soil around the plant) then this scenario is remote (it may happen 1 or 2 times a year) however, demand must be satisfied, otherwise some of the plants will not have available water and will wither (reliability of the electrical system).
This, of course, would require the installation of many pumps (which entails a high cost), some of which will not be used throughout the year.
In addition, back-up pumps (auxiliary service) have to be installed in the system so as to satisfy the water demand in the event that some of the other pumps should fail.
If additional plants are added to the system, then additional pumps should be added to ensure seamless supply of water to the plants.
In all cases, the owners of the plants (consumers) will have to pay the supplier (electricity company): (a) for the total amount of water (electricity - kilowatt-hours), (b) an amount in regards to the level of water flow (electrical capacity- kilowatt) needed to water their plants, in such a way that covers the capital expenditure for extra pumps needed to meet the maximum demand and (c) an additional amount to cover the cost for spare pumps (auxiliary services).
Finally, in mathematical terms, electrical capacity is the pace with which the electrical energy is used (or electricity flow) and electrical energy is the time integral of electrical capacity. Dr. Andreas Poullikkas is President of the Cyprus Energy Regulatory Authority (CERA)