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Information About Electricity Trading
Electricity trading is a type of trade where electric energy is bought and sold between producers, suppliers, consumers, and other market participants. Unlike other commodities, electricity is a type of energy that usually needs to be consumed at the moment it is produced, due to the physical storage challenges. Therefore, electricity markets are dynamic and complex markets where supply and demand balance needs to be maintained in real-time.
Electricity trading Wholesale and Retail It can be examined under two main categories:
1. Wholesale Electricity Trading
Wholesale electricity trading typically occurs between large-scale producers, large consumers (such as industrial facilities), and energy suppliers. Electricity generation companies offer the electricity they produce at power plants to the energy markets at wholesale prices. Wholesale electricity trading can be conducted through exchanges or bilateral agreements (OTC – Over the Counter).
Wholesale trading is conducted in electricity exchanges through spot markets and futures contracts:
- Spot MarketsThese are markets where electricity is bought and sold for delivery within the same day or the next day. Prices here change in real-time based on supply and demand.
- Futures ContractsThese are markets where electricity is bought and sold for delivery at a specific point in the future. These transactions play an important role in risk management to reduce price uncertainties.
2. Retail Electricity Trading
Retail electricity trading is the market where suppliers sell electricity to end-users, such as individuals and small businesses. Users with free consumer status can freely choose their energy suppliers, allowing them to benefit from different pricing and service packages. In Turkey, to be a free consumer in the electricity market, a certain annual electricity consumption threshold must be exceeded.
