Markets Overview

In North America and around the world, most electricity markets schedule supply in a day-ahead market and then balance any deviations in actual demand in a real-time market. This two-settlement system allows market participants to obtain financially-binding day-ahead schedules and then adjust their real-time production or consumption in response to real-time price signals.

Day-Ahead Market (DAM)

The DAM for energy and operating reserve encourages greater and more efficient market participation by providing market participants with an opportunity to lock in a day-ahead price for their day-ahead schedules. The DAM helps commit only the resources needed to maintain reliability and better aligns schedules and prices.

Benefits of the DAM include:

  • Greater financial certainty to market participants which allows them to better manage their risks
  • Greater operational certainty to the IESO which helps to maintain a reliable supply of electricity
  • Increased competition among market participants, ensuring lowest-cost resources are secured first
  • A more efficient use of resources by committing only the resources needed to maintain reliability
  • Better alignment of schedules and prices, enabled by the single schedule market design

To learn more about the design elements of the Day-Ahead Market read the IESO Quick Take

Real-time Energy Market (RTM)

The IESO's real-time energy market serves as a platform to balance any deviations between the day-ahead market and real-time needs. It accounts for last-minute changes in supply and demand, sudden demand spikes, renewable generation variability, and unexpected outages. Real-time prices are only be applied to the energy required to balance the market.

Operating Reserve

In both the real-time and day-ahead markets, the IESO procures stand-by power or demand reductions as operating reserve that can be called on with short notice. These markets ensure that additional supplies of energy are available should an unanticipated event or shortages take place in the real-time energy market.

For more information about the operating reserve market: Operating Reserve Markets

Other Competitive Procurements

The IESO combines the wholesale market, which helps manage the complexity of the grid moment-to-moment, with competitive procurements to drive the development of new supply. This approach helps ensure Ontario has the diversity and availability of electricity it needs. This balanced approach keeps prices stable while harnessing the power of competition to keep costs as low as possible.

To learn more:

  • Ancillary Services: certified black start facilities, regulation service, reactive support and voltage control service, and reliability must-run.
  • Capacity Auction: capacity to balance of Ontario’s resource adequacy needs on a short-term (six-month) basis.
  • Resources Acquisition and Contracts: the IESO’s medium-term and long-term procurements for supply resources.