How it works
A real-time market clears close to delivery and gives parties a last chance to trade at a firm price. The format depends on the region. Some run a short auction every half hour or every hour, each covering a few blocks that start soon after. Others clear every five minutes as the grid operator dispatches the system, setting a price for each interval as it happens.
Participants arrive with a position from the day-ahead market. A generator whose forecast has dropped can buy back the shortfall before it becomes an imbalance. A buyer whose load has risen can buy the extra. Settlement is usually on the difference, so a party pays or receives the real-time price only on volume that moved from its day-ahead schedule. Real-time prices swing more than day-ahead ones. They reflect forecast errors, outages and ramps that only become clear near delivery.
Why it matters
Real-time prices set the value of flexibility. A battery or fast-starting plant earns from the gap between day-ahead and real-time prices, so its revenue model needs both. For a wind or solar IPP, the real-time market is a way to correct a schedule before the error turns into deviation charges. For an industrial buyer on market-linked supply, real-time price spikes are a cost risk worth hedging.
A worked example
A 100 MW wind farm sold 60 MWh day-ahead for the 18:00–19:00 hour at $45/MWh. By 17:00 its forecast for that hour drops to 50 MWh. It buys 10 MWh back in the real-time market at $70/MWh, paying 10 × $70 = $700. Its net revenue for the hour is 60 × $45 − $700 = $2,700 − $700 = $2,000. Left alone, the 10 MWh shortfall would have settled at the imbalance price.
Illustrative figures.
Across markets
India's power exchanges run a real-time market with an auction every half hour, each clearing two fifteen-minute blocks that start about an hour later. In the US, the ISO's real-time market dispatches the grid every five minutes and settles departures from the day-ahead schedule at the nodal price. Europe has no single real-time market. Continuous intraday trading runs close to delivery, and the grid operator's balancing market covers the rest.