If the system is not producing enough power voltage will drop so they know to produce more power. If voltage is too high then producers drop power. Distribution can bleed off power if required to not over power the consumer but the need for that is rare.
In the US there is a grid west of the Mississippi and a grid and east of the Mississippi.
There are 3 type of sources:
- Have almost no control. For example wind.
- Have control at a variable cost. For example coal or natural gas.
Nuclear also has variable cost but it does not vary much. Nuclear is typically just run at design capacity.
- Hydro is unique in you have a finite source. There is only so much
water behind the dam. It does not cost more to let out more water
but when you let out all the water you cannot produce more.
First you fire up the cheap power (wind and nuclear). Then fill in the variable power with coal and gas.
For a state like WA that has a lot of hydro they have the luxury of selling off power at a premium during the summer when demand is high in the south. In the winter the reverse is true and WA can typically buy power for a discount from the south when demand is low in the south. A damn like Grand Coulee will not vary output by demand on a hourly or daily basis. They will just have like monthly flow rates based on water level. Since hydro is cheap power it is consumed first.