Question: I have been reading lately about electricity markets and I have stumbled upon the term ["volume risk"](https://en.wikipedia.org/wiki/Electricity_market#Risk_management). 

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> Volume risk is often used to denote the phenomenon whereby electricity market participants have uncertain volumes or quantities of consumption or production. For example, a retailer is unable to accurately predict consumer demand for any particular hour more than a few days into the future and a producer is unable to predict the precise time that they will have plant outage or shortages of fuel. 
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Basically, a fault in the prediction of both the buyer and seller may occur and either the electricity that has been purchased, may not end up being delivered or vice versa, the buyer may have ended up purchasing more electricity than needed.

However, I haven't found a clear explanation, what is done in these two cases. Who would cover the electricity difference if the generator does not end up producing the quantity stated in the trade or where would the overproduced electricity go, if the consumer has estimated his consumption poorly?

Answer: 
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> where would the overproduced electricity go, if the consumer has
>  estimated his consumption poorly?
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It doesn't go anywhere - if the consumer under-consumes compared to the original prediction then, that under-consumption is physically less-current being taken and less-power being supplied by the generator. 

Electricity isn't like a delivery van setting off to deliver bread or cakes - it's much more instant than that and if a load takes less current or power then it's pretty much instantly reflected in the generator producing less power and the oil/coal/energy being used by the turbine and generator being less.

There is a financial deficit only and that gets resolved by credit arrangements (my guess).
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> Who would cover the electricity difference if the generator does not
>  end up producing the quantity stated in the trade or where would the
>  overproduced electricity go, if the consumer has estimated his
>  consumption poorly?
> 
> 
> 

This is why continuous grid management is needed.

Electricity in the grid in most cases cannot be stored for later use. It is a good approximation to assume that at any instant the electric power consumed is exactly equal to the electric power produced.

As you know, there are different ways to generate electricity. Some of them are almost 100% predictable (e.g. nuclear power plant), others are not (wind/solar).

The challenge for grid management is now to first try and predict production and consumption for a certain period, then to acquire the predicted needed amount of production capacity for that period, and then to keep monitoring fluctuations in production or consumption, i.e. deviations from the predictions, and react on those fluctuations by adding or removing electricity production (sometimes also consumption) as quickly as possible.

This is done by employing a certain mix of power producers: A nuclear power plant takes significant time (hours maybe) to significantly increase or decrease power output, wind/solar can very quickly (seconds) be taken off the grid, but e.g. at night solar power cannot be requested to generate some extra power to accomodate increased demand. Gas-powered power plants can be regulated up or down relatively quickly and are thus in demand exactly to fill the gap between the constant base load of the big (e.g. nuclear) power plants and consumption which may vary faster than a nuclear plant could accomodate.

The whole thing works very much along the basic economical model, putting a certain price to a certain risk.

Nuclear plants produce cheap electricity, but are in-flexible. Solar/wind is also not very flexible. In fact, solar and wind energy are a grid operator's worst nightmare and they're not even cheap but are usually subsidized and otherwise politically encouraged. Gas is more flexible than nuclear and more controllable than solar/wind, but also more expensive per unit of energy (Joule, Wh,...) produced than nuclear and disliked due to CO².

Bottomline: Grid operators try to get the cheapest electricity they can, but at the same time they absolutely *must* make sure to always be able to adjust production to varying, unpredictable consumption (or production), because at every instant power supplied to the grid exactly matches the power taken from the grid. If they try and supply more or less than is actually demanded, installations connected to the grid will malfunction (under-supply, i.e. under-voltage) or be destroyed (over-supply, over-voltage). That's just physics.