Interactive lecture
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How Electricity Markets Work
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02 / Roles
Who participates in the market
Generators, suppliers, consumers, traders, BRPs, and the TSO all look at the same physical system from different responsibilities.
03 / Variable output
Solar and wind are cheap, but weather-dependent
Wind and solar often have low marginal cost, but their output depends on weather forecasts. Forecast errors can create balancing needs later.
04 / Flexibility
Flexible assets help the system adapt
Dam hydro, batteries, and thermal plants can shift or control output. Run-of-river hydro is renewable, but less flexible than dam hydro.
05 / Day-ahead
The day-ahead market creates tomorrow's plan
Participants submit bids and offers before delivery. The market clears a schedule that gives everyone a first coordinated position.
06 / Clearing
Price forms where accepted supply meets demand
Offers are stacked from low to high price. The clearing price is set by the marginal accepted offer when demand is met.
07 / Value
Day-ahead trading reduces uncertainty
The schedule helps suppliers cover expected demand, generators plan output, and traders manage risk before the delivery day begins.
08 / Intraday
Intraday markets exist because forecasts change
After day-ahead clearing, new weather and demand information arrives. Intraday trading lets participants repair their positions.
09 / Scenario
A forecast change creates a position gap
Imagine solar output falls below the day-ahead forecast. A supplier or BRP may need to buy more energy before delivery.
10 / Adjustment
Intraday trading adjusts positions before delivery
Participants buy or sell closer to real time so their commercial positions better match their physical expectations.
11 / Balancing
Balancing markets protect real-time reliability
Even after intraday trading, the physical system can drift. The TSO activates balancing energy to keep supply and demand aligned.
12 / Balancing roles
Who creates and solves balancing needs
Forecast errors, plant outages, and demand surprises create needs. Flexible hydro, batteries, and dispatchable plants can provide services.
13 / Settlement
Imbalance exposure connects the market layers
Day-ahead sets the first position. Intraday adjusts it. Balancing handles real time. Settlement prices the remaining deviations.
14 / Takeaway
Launch the Market Simulation ->
Markets organize uncertainty before it reaches real time
Day-ahead coordinates tomorrow, intraday repairs positions, balancing protects the physical grid, and settlement closes the loop.
