Why does micelle formation take place when soap is added to water?

Micelle formation takes place because of the dirt particles in water and clean water. There are two mediums that are involved: one is pure water and the other being dirt (also called impurities).

The soap also has two mediums:

(i) organic tail and

(ii) ionic head

So the organic tail mixes and dissolves with the dirt whereas the oil or grease and ionic head dissolves and mix with the water. Therefore, when the material to be cleaned is removed from the water, the dirt is taken off by the soap molecules in the water. Hence, the soap cleans by forming closed structures by the mutual repulsion of the micelles (positively charged heads).

other solvents such as ethanol in which sodium salt of fatty acids does not dissolve, so not able to form such micelles.