Energy Trading, Scheduling, and Settlement
What this domain tests
This domain tests the trade-to-settlement lifecycle: execution, nomination, scheduling, gate closure, imbalance, and the calculation of charges and credits across day-ahead, intraday, and balancing markets.
Core rules and concepts
- Scheduling: physical nominations must match contracted positions and be submitted before gate closure; late changes become imbalance exposure or are rejected.
- Settlement determinants: contracted energy, actual metered energy, imbalance volume, imbalance price, transmission charges, losses, and non-energy fees.
- Sign convention: a long position sold into the market is a credit; a short position is a charge. Consistency is critical because a reversed sign changes the invoice.
- Two-settlement logic: day-ahead positions are settled at the day-ahead price; deviations from the day-ahead schedule are settled at the real-time or imbalance price.
- Losses and congestion: locational settlement may include loss factors and congestion charges that are separate from the energy price.
Worked example
A participant buys 100 MWh in the day-ahead market at €50/MWh. Actual metered consumption is 110 MWh. The 10 MWh shortfall is settled at the imbalance price of €80/MWh. Energy cost is (100 × 50) + (10 × 80) = €5,000 + €800 = €5,800. The effective unit cost is €5,800 ÷ 110 = €52.73/MWh. If the participant had bought 100 MWh and consumed 90 MWh, the 10 MWh surplus would be settled at the imbalance price, creating a credit only if the imbalance price is positive and the sign convention treats the surplus as a sale.
Traps that cost marks
Double-counting the day-ahead and imbalance volumes; applying a single price to all metered energy; ignoring gate-closure rules; reversing buy and sell signs; and omitting loss factors, transmission charges, or taxes from the final settlement.