Spot market: Buy/sell energy for immediate delivery (today or tomorrow).
Forward contract: Customized deal to deliver energy at a set future price/date.
Futures: Standardized, exchange-traded forwards with daily margining and clearing.
Swap: Exchange variable price for fixed price to manage risk.
Option: Right, not obligation, to buy/sell at a preset price.
Day-ahead market: Auctions set prices for each hour of tomorrow’s power.
Intraday market: Continuous trading to adjust positions closer to real time.
Balancing market: Operator corrects supply-demand mismatches in real time.
Capacity market: Payments ensure enough generation is available when needed.
Ancillary services: Grid support products like frequency and reserves.
Power Purchase Agreement (PPA): Long-term contract to buy electricity, often renewables.
Hedging: Reducing price risk by offsetting exposure with contracts.
Margin: Cash posted to cover potential losses on open positions.
Clearing house: Central counterparty guaranteeing trades and managing default risk.
ETRM system: Software to record trades, value positions, and manage risk.
Imbalance price: Cost when actual delivery differs from scheduled volume.
Merit order: Dispatching plants from cheapest to most expensive to meet demand.
Marginal price (pay-as-clear): Price set by the last unit needed to meet demand.
EU ETS: EU carbon market where firms trade emission allowances.
Guarantees of Origin (GoO): Certificates proving electricity’s renewable origin.
