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Products and Markets

In: Energy Trading and Risk Management

Author

Listed:
  • Felix Müsgens

    (Brandenburg University of Technology Cottbus-Senftenberg)

  • Alexander Bade

    (Albstadt-Sigmaringen University of Applied Sciences)

Abstract

Energy commodities are traded on several different markets. These markets vary by time horizon between purchase and delivery (e.g. year-ahead, month-ahead or day-ahead), organisation of market (e.g. auction or continuous trading, power exchange or broker platform), traded commodity (e.g. electricity or gas), and type of financial contract (e.g. forward, future or option). The chapter introduces the two vital time dimensions of energy trading, namely the delivery period and the trading period first. Regarding the delivery period, trading on day-ahead markets takes place shortly before delivery and can be differentiated from delivery periods further in the future. In the day-ahead market, participants have significant knowledge about various factors on the supply side and the demand side as well as their own open position. Traded volumes on day-ahead markets are high in Europe, both for electricity and natural gas. Hence, we start the description of markets with day-ahead markets, covering both electricity and natural gas. Then, we discuss the longer time horizon and continuous trading of long-term products, before differentiating different traded products. Lastly, we introduce the vital concept of liquidity and conclude the chapter with a brief discussion of the three key factors motivating energy trading.

Suggested Citation

  • Felix Müsgens & Alexander Bade, 2024. "Products and Markets," Springer Books, in: Energy Trading and Risk Management, chapter 0, pages 9-34, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-57238-8_2
    DOI: 10.1007/978-3-031-57238-8_2
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