This glossary explains the core terms used across European power markets, grid constraints, utility-scale BESS, policy, and project economics. Definitions are written for people making decisions—investors, developers, OEMs, utilities, and lenders—so you'll see not just "what it means", but why it matters and how it shows up in real EU market work.
Our work is grounded in per-unit metrics (€/MWh, €/kWh, MW, GWh) and evidence from sources such as ENTSO-E transparency data, power exchanges, and EU/regulator datasets.
Definition: Grid support services (e.g., frequency response, reserves) procured to maintain stable operation.
These can form a meaningful part of a BESS revenue stack—but availability and saturation risks matter.
We map service types, eligibility, and observed price ranges where public data exists.
Definition: Real-time (or near real-time) mechanisms TSOs use to balance supply and demand, often via upward/downward balancing energy.
Balancing prices reveal system stress and flexibility value.
We compare balancing spread behaviour and link it to outages, RES swings, and interconnector limits.
Definition: A geographic market area where a single wholesale price is formed (unless split).
Zone design affects price signals, curtailment, and "where to build" decisions.
We normalise analysis by bidding zones and flag where splits distort historic comparisons.
Definition: The average price actually earned by a generator, weighted by its production profile (often lower than baseload average for solar/wind).
This is what underwrites real revenues—especially for merchant RES.
We estimate profile-weighted prices and compare them against baseload averages and curtailment risk.
Definition: The main wholesale electricity market where power is traded for delivery the next day, typically cleared hour-by-hour.
DA prices often set the baseline revenue reference for merchant assets and influence PPA pricing.
We analyse hourly DA prices (€/MWh), seasonality, spikes, and negative-price frequency for market comparison.
Definition: A market for trading electricity closer to real-time (after DA), used to correct forecast errors (wind/solar/demand).
ID can be a material revenue source for flexibility assets and a cost centre for poor forecasting.
We look at ID spreads vs DA and how volatility changes near real-time.
Definition: Coordinated cross-border market clearing that links prices between bidding zones using interconnector capacity.
Coupling can reduce price differences, but congestion keeps spreads alive.
We examine price convergence/divergence patterns alongside cross-border flows and constraints.
Definition: Periods when wholesale prices fall below zero—generators pay to stay online or avoid shutdown costs.
Negative prices can destroy captured price for RES and change storage arbitrage logic.
We track frequency, duration, and clustering to assess structural oversupply and inflexibility.
Definition: The degree of price variation over time (hourly/daily/seasonal).
Volatility drives arbitrage opportunities but increases revenue uncertainty.
We quantify volatility (e.g., standard deviation in €/MWh) and link drivers like outages and RES variability.
Definition: The share of time an asset is able to deliver its contracted or expected service (not down for faults/maintenance).
Many revenue lines (especially ancillary/capacity) pay for availability, with penalties for non-performance.
We treat availability and penalty regimes as essential to revenue realism, not a footnote.
Definition: Risk that a hedge doesn't match the actual revenue exposure (e.g., hedge index differs from node/zone price, or profile differs).
You can be "hedged" on paper and still lose money in practice.
We flag where location (congestion) and profile (solar shape) create mismatch between hedges and realized revenues.
Definition: Ability of an asset to adjust output on demand (up/down), with controllable timing.
Dispatchability is what markets pay for when the system is stressed or constrained.
We classify technologies by practical dispatchability and align that with which revenue lines are truly accessible.
Definition: Periods of low wind and low solar output, often in winter, that stress the system.
These events drive scarcity pricing, adequacy debate, and the value of firm flexibility.
We locate historical low-RES periods and link them to price spikes and balancing stress.
Definition: Ability to change generation/consumption patterns to match system needs (fast response, ramping, shifting).
High-RES systems increasingly pay for flexibility rather than raw energy volume.
We map flexibility value to volatility, constraint indicators, and the actual market products available.
Definition: Difference between predicted and actual generation/demand, often most relevant for wind/solar and load.
Larger errors increase imbalance costs and drive intraday/balancing activity.
We interpret forecast error via intraday liquidity, balancing spread behavior, and curtailment events.
Definition: A time series of forward prices for future delivery periods (e.g., month-ahead, year-ahead).
It influences valuation, financing assumptions, and whether arbitrage logic is structurally viable.
We compare forward curve shape against historical volatility and policy risk to flag fragile assumptions.
Definition: Markets where electricity (or related products) are traded for delivery months/quarters/years ahead, often via standardized contracts.
Forward prices shape hedge strategy, PPA negotiation, and investor expectations of future revenue.
We use forward curves as a reality-check against "single-year" spot narratives, and to stress-test merchant exposure.
Definition: Using contracts (PPAs, forwards, swaps, options) to reduce exposure to volatile spot prices.
Hedging can protect downside but may cap upside; it also affects lender comfort.
We separate "theoretical revenue" from "hedgeable revenue" under real market liquidity and basis risk.
Definition: The process and pricing rules used to charge or pay market participants when actual delivery deviates from their schedule.
Imbalance rules can materially change the economics of RES and flexibility, especially for smaller players.
We treat imbalance settlement design as a structural driver of risk and a differentiator between markets.
Definition: Variability of generation output due to weather dependence (wind/solar), not controllable dispatch.
Intermittency increases forecast error costs and raises the value of flexibility and transmission.
We evaluate intermittency impacts through volatility, balancing needs, and profile-driven capture price.
Definition: Revenue and curtailment risk driven by where the asset connects on the network and how local constraints behave.
Two projects in the same country can have very different outcomes because of grid reality.
We treat locational risk as a first-order driver in "where to build" and "time-to-power" assessments.
Definition: The lowest output level a thermal plant can maintain while staying online.
High MSG increases inflexibility, which can deepen negative prices and curtailment in high-RES hours.
We use MSG as an explanatory driver for "why prices behave badly" in certain systems.
Definition: Pricing model where electricity price varies by node/location based on marginal cost plus congestion/losses (more common outside much of Europe, though discussed in reform debates).
If adopted or expanded, nodal signals can dramatically change locational economics.
We reference nodal concepts when explaining why "single-zone price" can hide constraint-driven risk.
Definition: Frequency and duration of unplanned plant or network outages.
Outages drive price spikes, balancing stress, and reliability concerns.
We cross-check outage signals against price events to avoid attributing everything to "renewables variability."
Definition: When adding more of the same generation type (e.g., solar) lowers prices during its production hours, reducing capture price.
It's a structural headwind for merchant renewables in high-penetration markets.
We track capture price trends and negative-price clustering to identify cannibalization intensity.
Definition: Risk that regulators impose caps, clawbacks, or emergency interventions that limit upside or change settlement rules.
It changes tail-risk distribution and can undermine financing cases built on extreme events.
We tag this as a "regulatory kill-risk" when upside depends on rare spike events.
Definition: How quickly a plant can increase or decrease output (e.g., MW per minute).
Determines eligibility and competitiveness in fast-response services and real-time balancing.
We treat ramp rate as a gating factor for which revenue lines are feasible.
Definition: The extra return investors demand to take on uncertainty (price risk, policy risk, execution risk).
A high risk premium is often the hidden reason projects stall or valuations compress.
We translate qualitative risks (grid, policy, saturation) into "which assumption is doing the heavy lifting" in the model.
Definition: Price formation that allows high prices during tight supply conditions to signal scarcity and incentivize flexibility/investment.
Scarcity events can make or break merchant economics for flexible assets, if regulation allows the signal.
We examine spike frequency/duration and policy constraints (caps, interventions) that suppress scarcity signals.
Definition: Testing model predictions against historical outcomes; MAE and RMSE are common error measures.
Prevents "pretty models" that don't match market behaviour.
We validate outputs before using them in decision-facing conclusions.
Definition: A major EU source for system data such as demand, generation, flows, outages, and (in many cases) prices.
Hourly/15-minute system data is the fastest way to separate narrative from reality.
We build country-hour datasets and cross-check with exchanges and secondary sources.
Definition: The full set of revenue streams an asset can earn (energy, balancing, ancillary, capacity, support contracts), plus the risks attached to each.
Storage and flexible assets rarely survive on one revenue line.
We map revenue stack components, then tag stability vs saturation vs policy dependency.
Definition: Cross-verifying the same signal across multiple sources to reduce error and bias.
Single-source analysis fails quietly.
We cross-check ENTSO-E, exchanges, and reputable secondary datasets before final conclusions.
Definition: Whether a project's revenues, risks, and contracts are acceptable to lenders and investment committees.
"Technically viable" can still be "finance impossible".
We connect revenue stability, policy risk, and grid constraints into a bankability narrative.
Definition: Capital expenditure (build cost) and operating expenditure (run cost).
CAPEX affects required returns; OPEX shapes resilience under price pressure.
We benchmark technology economics using consistent cost categories.
Definition: A market concentration index used to assess how concentrated ownership/market power is.
Concentration affects pricing behaviour and competitive dynamics.
We apply HHI to ownership and generation mix when analysing market structure.
Definition: The average cost per MWh of generating electricity over the asset lifetime, including capex/opex and financing assumptions.
Useful benchmark, but it's not the same as revenue or profitability.
We compare LCOE against observed/expected price patterns and capture price, not against a single average.
Definition: The share of revenues that depends on market prices rather than fixed contracts/support.
Higher merchant exposure increases upside and downside; lenders care about downside.
We map merchant vs contracted revenue within the revenue stack and stress-test volatility.
Definition: Standardised units that allow apples-to-apples comparisons across countries and technologies.
Without normalisation, cross-market comparisons are often misleading.
This is the backbone of our datasets and visuals, used across reports.
Definition: A contract to buy electricity at agreed terms (fixed, indexed, floor/ceiling, etc.).
PPAs can stabilise revenues but can be complex and credit-dependent.
We treat PPA structure as a bankability lever and compare typical structures across EU markets.
Definition: The blended cost of capital used to discount cash flows, reflecting debt/equity costs and risk.
WACC is often the biggest swing factor in project viability.
We run sensitivity scenarios to show "how much risk is being priced in."
Definition: A battery-based asset that stores electricity and dispatches it later; sized by power (MW) and energy (MWh).
BESS economics depend on market design, volatility, grid constraints, and degradation.
We model revenue stack by market (energy, balancing, ancillary, capacity) and stress-test bankability.
Definition: Market design where assets are paid for being available to provide capacity, not just energy delivered.
Can stabilise revenues, but eligibility rules and penalties matter.
We treat capacity revenue as conditional and test downside scenarios.
Definition: Number of charge/discharge cycles a battery can perform before reaching end-of-life thresholds.
Determines how "hard" you can run the asset without destroying economics.
We test revenue stacks against practical cycle constraints.
Definition: The loss of usable battery capacity and performance over time and cycles.
Degradation directly affects lifetime MWh throughput and net revenues.
We include degradation in cycle economics and revenue realism checks.
Definition: How much of the battery's capacity is used during a cycle (percentage).
Higher DoD often accelerates degradation but can increase per-cycle value.
We avoid "perfect dispatch" assumptions by reflecting DoD trade-offs in modelling.
Definition: Percentage of energy recovered after charging and discharging a storage system.
Lower RTE reduces arbitrage profitability and changes optimal dispatch.
We apply RTE assumptions consistently when comparing cycle economics across markets.
Definition: Utility-scale connects to the grid; BtM sits behind a customer meter (often reducing bills and peak charges).
The value drivers, regulation, and data availability differ sharply.
We keep these segments separate in sizing, economics, and policy mapping.
Definition: A support contract where an asset receives a top-up (or pays back) depending on the difference between market price and a strike price.
Reduces merchant exposure but depends on scheme rules and reference pricing.
We model CfD as a bankability lever and flag scheme-specific risks.
Definition: EU carbon pricing mechanism where emitters need allowances (priced in €/tCO₂).
ETS affects marginal generation costs and wholesale prices—especially in thermal-heavy systems.
We incorporate ETS price as a driver in price/volatility attribution work.
Definition: Support mechanisms that pay a fixed tariff (FiT) or an add-on premium on top of market prices.
Affects investment flows and project risk-return, but policy stability is crucial.
We map which mechanisms exist and how they interact with market revenues.
Definition: The rules and mechanisms that shape how electricity is priced, traded, and balanced (including reforms).
Small rule changes can shift storage value, RES economics, and hedging options.
We translate policy text into decision-relevant impacts on revenue and constraints.
Definition: Policy tools that limit prices or capture excess revenues during crises.
They alter tail-risk and lender confidence.
We treat these as "regulatory kill-risk" variables in market attractiveness scoring.
Definition: When grid capacity limits prevent power from flowing freely, causing local constraints and price differences.
Congestion shapes locational risk, curtailment, and the value of flexibility and transmission upgrades.
We map congestion hotspots using flows, price separation, and redispatch signals where available.
Definition: When a generator is forced to reduce output (often due to grid congestion or system limits).
Curtailment is a direct hit to revenue and a signal of local saturation.
We combine system data and constraint indicators to identify where curtailment is structural vs episodic.
Definition: Entity responsible for local distribution networks (medium/low voltage).
DSOs often become the bottleneck for behind-the-meter and distributed flexibility connections.
We treat DSO constraints as separate from transmission congestion when mapping connection reality.
Definition: The pipeline of projects waiting for grid connection approval and physical capacity.
"Pipeline MW" is not "deliverable MW". Queues can be the real limiter on growth.
We treat queue/connection rules as a primary constraint variable in country opportunity assessment.
Definition: Cross-border transmission line enabling electricity trade between countries/bidding zones.
Interconnectors can reduce price extremes—but can also become binding constraints.
We link flows and price spreads to understand when interconnectors are helping vs saturated.
Definition: Expected number of hours (or time) in which demand may not be met without additional measures.
A key adequacy signal used in system planning and capacity market design.
We use LOLE as a risk indicator—not a standalone "go/no-go".
Definition: Actions TSOs take to change generation dispatch to relieve congestion (often with compensation costs).
High redispatch signals grid stress; it can also affect market signals and project economics indirectly.
We track redispatch-related indicators and interpret them as "system friction" for deliverability.
Definition: Whether the power system has enough reliable capacity to meet demand under stress conditions.
Adequacy drives capacity mechanisms, price formation under scarcity, and reliability policy.
We interpret adequacy metrics (including LOLE) alongside reserve margins and peak stress patterns.
Definition: Entity responsible for high-voltage grid operation and system security.
TSOs influence grid access, curtailment rules, and balancing mechanisms.
We reference TSO plans and operational data when assessing constraints and adequacy.
If you tell us the markets and technologies you care about (e.g., Germany utility-scale BESS, UK balancing, Spain solar capture price), we'll prioritize the relevant term set and add country notes where appropriate.