Glossary of Terms
Arbitrage
Exploiting price differences between two or more markets to make a profit.
Ask
An offer to sell energy at a specific price.
Basis Risk
The risk associated with price differences between related energy contracts.
Bid
An offer to buy energy at a specific price.
Big Data Analytics
Using advanced data analytics to derive insights and predictions from vast amounts of energy data.
Biomass Energy
Energy generated from organic materials like wood, crop waste, and biofuels.
Block Trade
A large, privately negotiated trade outside the regular exchange.
Blockchain
A decentralized digital ledger technology with potential applications in energy trading and verification.
Brent Crude
A major trading classification of sweet light crude oil, used as a major trading benchmark.
Capacity Market
A market where energy generators are paid for having the capacity to generate electricity.
Carbon Capture and Storage (CCS)
A technology that captures carbon dioxide emissions from industrial processes and stores them underground.
Carbon Credits
Tradable permits representing a reduction in greenhouse gas emissions.
Carbon Disclosure
Reporting on an organization's carbon emissions and environmental impact.
Carbon Neutrality
Achieving a balance between the carbon emissions produced and removed from the atmosphere.
Carbon Offset
A measure to compensate for carbon emissions by investing in projects that reduce or capture emissions elsewhere.
Carbon Pricing
Implementing a cost on carbon emissions to encourage emissions reduction.
Carbon Tax
A tax on carbon emissions to incentivize reductions.
Circular Economy
A regenerative approach to resource management, reducing waste and promoting sustainability.
Clean Energy Standard (CES)
A policy framework promoting the use of low-carbon and renewable energy sources.
Coal
A fossil fuel used for electricity generation and industrial processes.
Cogeneration
Simultaneous production of electricity and useful heat from the same energy source.
Consumers
Entities that use energy for various purposes, including households, industries, and businesses.
Contract
A legally binding agreement specifying the terms of an energy transaction.
Counterparty Risk
The risk of a trading partner defaulting on their obligations.
Crude Oil
Unrefined petroleum extracted from the ground, a primary source of energy and a basis for various products.
Data Analytics
Using data analysis to make informed trading and risk management decisions.
Day Trading
Buying and selling energy commodities within the same trading day to profit from short-term price movements.
Decentralized Energy
Localized energy generation often using renewable sources, reducing transmission losses.
Demand Response
Adjusting electricity usage in response to supply and demand fluctuations.
Demand-side Management (DSM)
Strategies to optimize energy use by consumers, including load shifting and energy-efficient technologies.
Derivatives
Financial contracts, such as futures and options, whose value is derived from an underlying energy commodity.
Downstream
The final stage of the energy supply chain, involving the refining, distribution, and marketing of energy products to consumers.
EBB
A digital platform or system used in the energy industry for electronic communication, including posting information about energy supply and demand, capacity, nominations, and other relevant data.
Electricity
The flow of electrical power, often traded in megawatt-hours (MWh).
Energy Audit
An assessment of a building or facility to identify energy-saving opportunities and improvements.
Energy Hedge Fund
An investment fund focused on energy commodities and assets.
Energy Market
A marketplace where electricity, natural gas, and other energy commodities are bought and sold.
Energy Star
A program by the U.S. Environmental Protection Agency (EPA) that identifies and promotes energy-efficient products and practices.
Energy Storage
Technologies like batteries and pumped hydro used to store excess energy for later use.
ERP
In the context of the energy industry, ERP systems are used for managing financials, human resources, procurement, and other core business functions.
ESCO
Energy Service Company, offering services to improve energy efficiency and reduce energy costs.
ETMS
Software used to capture, track, and optimize energy-related trades, providing tools for trade confirmation, scheduling, and risk management.
ETRM
Software used to manage energy trading, risk, and operations.
EU EEX (European Energy Exchange)
An exchange for trading electricity, natural gas, coal, and emissions allowances in Europe.
EU ETS
European Union Emissions Trading System, a cap-and-trade program for carbon emissions in Europe.
Feed-in Tariff
A government policy that guarantees a fixed payment for renewable energy generation.
FERC
The Federal Energy Regulatory Commission, responsible for regulating energy markets in the United States.
Forward Price
The price of energy for future delivery, agreed upon today.
Futures Market
A market where contracts for the delivery of energy at a future date are bought and sold.
Gas Hub
A trading hub where natural gas is bought and sold, often used as a reference point for pricing.
Gas Management
The comprehensive management of natural gas operations, including procurement, transportation, storage, and distribution.
Gas Plant Accounting
It involves tracking and reporting on the processing of natural gas, including the allocation of products (e.g., NGLs) and associated revenues and costs.
Gatherer
An entity or organization responsible for collecting and aggregating various energy resources, such as natural gas or crude oil, from multiple production sources or fields.
Geothermal Energy
Heat energy extracted from the Earth's core for electricity generation.
Green Bonds
Bonds issued to fund environmentally friendly projects, including renewable energy.
Green Energy Certificates
Tradable certificates verifying that energy comes from renewable sources.
Grid Code
A set of regulations specifying technical and operational requirements for power grid operation.
Grid Operator
An entity responsible for managing the flow of electricity on the power grid.
Grid Resilience
The ability of an energy grid to withstand and recover from disruptions or disasters.
Heat Rate
The efficiency of a power plant in converting fuel into electricity.
Heat Rate Curve
A graphical representation of a power plant's efficiency in generating electricity.
Hedging
Using financial instruments to mitigate price risk in energy trading.
Hybrid Energy Systems
Combining multiple renewable energy sources for more stable generation.
Hydropower
Electricity generated from the movement of water, typically through dams and turbines.
ICE (Intercontinental Exchange)
A global exchange for trading energy and commodity derivatives.
Imbalance Makeup
The process of rectifying discrepancies or imbalances in the transportation and delivery of energy resources, such as natural gas.
Independent Power Producer (IPP)
A company that generates electricity for sale to utilities and consumers.
Index Price
A benchmark price used as a reference in energy trading.
IoT (Internet of Things)
Connecting devices and equipment for remote monitoring and control in the energy sector.
Islanding
A scenario where a portion of the grid becomes disconnected but continues to operate autonomously.
Just Transition
Ensuring equitable opportunities for workers and communities affected by the shift to a low-carbon economy.
LEED Certification
Leadership in Energy and Environmental Design certification for buildings meeting specific sustainability and efficiency criteria.
LMP (Locational Marginal Pricing)
A pricing method that sets electricity prices based on location and grid conditions.
LNG
Liquefied Natural Gas, natural gas that has been cooled to a liquid state for transportation and storage.
Load Factor
The ratio of average power demand to peak demand over a specific period.
Load Serving Entity (LSE)
An organization responsible for supplying electricity to consumers within a specific area.
Load Shedding
The deliberate reduction of electricity demand to prevent grid overloads or blackouts.
Long Position
A position where a trader or investor owns energy commodities with the expectation that prices will rise.
Merit Order
A ranking of power plants based on their operational cost, used to dispatch electricity in the most cost-effective manner.
Midstream
The intermediate stage of the energy supply chain that involves the transportation, storage, and processing of energy resources, like crude oil, natural gas, or NGLs.
Natural Gas
A hydrocarbon gas, primarily methane, used for heating, electricity generation, and as a fuel source.
Net Metering
A billing arrangement where excess electricity generated by a renewable energy system is credited back to the grid.
Netback
The calculation of the net value or profit of a resource, typically oil or natural gas, after accounting for all associated costs, such as transportation, processing, and taxes.
North American Electric Reliability Corporation (NERC)
An organization responsible for ensuring the reliability and security of the North American bulk power system.
Nuclear Energy
Energy generated through nuclear reactions in power plants.
NYMEX (New York Mercantile Exchange)
A major commodities exchange, including energy futures and options contracts.
OPEC
Organization of the Petroleum Exporting Countries, a group of major oil-producing nations.
Options
Derivative contracts that give the holder the right, but not the obligation, to buy or sell energy at a specified price on or before a certain date.
OTC (Over-the-Counter) Market
A decentralized market for trading energy contracts directly between parties.
Position Management
Tracking and managing open positions in energy markets.
Power Pool
A market structure where multiple generators sell electricity into a common pool, and utilities purchase from the pool.
Power Purchase Agreement (PPA)
A long-term contract between an energy generator and a buyer, often used in renewable energy projects.
Private Equity
Investment in energy companies or projects by private equity firms.
Producers
Companies or entities that extract or generate energy commodities.
Project Finance
Financing for energy projects based on the expected cash flows generated by the project.
PUC
Public Utility Commission, a state-level regulatory authority overseeing utilities.
RECs
Renewable Energy Certificates, tradable certificates representing renewable energy generation.
Regulators
Government agencies overseeing and regulating energy markets and utilities.
Renewable Energy
Energy generated from renewable sources like wind, solar, hydro, and geothermal.
Renewable Portfolio Standard (RPS)
A government mandate requiring a percentage of electricity to come from renewable sources.
Retail Energy Provider (REP)
A company that sells electricity or natural gas directly to consumers.
Retail Market
The consumer-facing market where energy is sold to end-users, including residential, commercial, and industrial customers.
Risk Assessment
Evaluating and managing the financial risks associated with energy trading.
RTO/ISO
Regional Transmission Organization/Independent System Operator, entities managing electricity grids and markets.
SCADA (Supervisory Control and Data Acquisition)
A control system used to monitor and control energy infrastructure.
Scheduler
Responsible for planning and managing the movement of energy resources, such as oil, gas, or electricity, from production to delivery.
Settlement Price
The price at which a contract is settled at its expiration.
Short Position
A position where a trader or investor sells energy commodities with the expectation that prices will fall.
Smart Grid
An intelligent electricity distribution system that uses digital technology for more efficient and reliable energy delivery.
Smart Meter
A device that records and communicates electricity usage in real-time, facilitating demand response.
Solar Photovoltaic (PV)
Solar panels that convert sunlight into electricity.
Spot Market
A market where energy is traded for immediate delivery, typically within a day.
Spot Price
The current market price for immediate delivery of energy.
Spread Trading
Simultaneously buying and selling related energy contracts to profit from price differentials.
Substation
A facility that converts high-voltage electricity to lower voltages for local distribution.
Sustainable Development Goals (SDGs)
United Nations goals for global sustainability, including affordable and clean energy.
Swing Trading
A short to medium-term trading strategy that takes advantage of price swings in energy markets.
System Operator (SO)
An entity responsible for ensuring the reliability and stability of the power grid.
Traders
Individuals or organizations engaged in buying and selling energy commodities.
Transformer
An electrical device that changes the voltage of electricity for efficient transmission and distribution.
Transmission Lines
High-voltage power lines that transport electricity over long distances.
Upstream
The initial stage of the energy supply chain, involving the exploration and production of energy resources, such as oil, gas, or raw materials.
Utilities
Companies responsible for generating and distributing electricity and natural gas.
VaR (Value at Risk)
A statistical measure used to estimate potential financial losses in energy trading.
Volatility
The degree of variation in energy prices over time, affecting risk assessments.
Wholesale Market
A market where energy is traded in large quantities between producers and retailers.
Wind Turbine
A device that converts wind energy into electricity.
