f97.beERIK SCHMIDT’S WORKSHOP
← All terms

Glossary · Energy industry & energy transition

Baseload and Peakload

Baseload peak load electricity trading futures market Base load electricity procurement load profile

Baseload and Peakload are standardised products in electricity trading. They define the hours in which a constant power output is delivered or financially settled. Baseload (base load band) covers all hours of a delivery period, for example a day, a week, a month, a quarter or a year. Peakload (peak load band) covers only a defined block of the day. For German power futures on the EEX energy exchange, this is the period from 8 a.m. to 8 p.m. on all days from Monday to Friday. According to the wording of the contract specification, public holidays that fall on a weekday are therefore also part of the peak block. Other markets, over-the-counter contracts and product variants may use different time windows. The applicable set of rules is always decisive.

The terms therefore describe delivery profiles. They say nothing about specific power plants or the physical properties of the power system. Besides base and peak, there are other standard blocks, such as off-peak. Off-peak covers the hours outside the peak block, that is, 12 a.m. to 8 a.m. and 8 p.m. to 12 a.m. on weekdays, plus the entire weekend. Base is thus equal to the sum of peak and off-peak.

Power, energy and a worked example

Distinguishing between power and energy helps with understanding. Power in megawatts (MW) indicates how much electricity flows at a given moment. The amount of energy in megawatt hours (MWh) is power multiplied by time. EEX calculates the contract volume in exactly this way: the number of delivery hours in the delivery period multiplied by the agreed constant power. A base day at 1 MW normally comprises 24 MWh. On the day of the switch to daylight saving time it is 23 MWh, on the day of the switch back it is 25 MWh. A peak day comprises 12 MWh.

Extrapolated to a year: a base year at 1 MW comprises 8,760 MWh in a common year and 8,784 MWh in a leap year. The missing and the additional hour of the clock changes offset each other within the year. For monthly products for March and October, however, they have an effect. A peak year at 1 MW contains significantly fewer hours. The year 2027 has 261 days from Monday to Friday, so 261 times 12, which is 3,132 hours or 3,132 MWh. The traded power is the same, but the amount of energy is only a good third. Prices are quoted in euros per MWh. The total value of a contract results from price, power and number of hours.

Distinction from base load and peak load in the physical sense

Baseload is often equated with base load. This is imprecise. Base load refers to the lower, permanently present part of demand in a load profile. Baseload, by contrast, is a trading product with a uniform band across all hours. Anyone who buys Baseload hedges the price for part of their expected consumption. However, this implies neither that the electricity comes from a particular base-load power plant nor that the system needs plants with constant output around the clock.

The same applies to Peakload and peak load. Peak load means the highest power values actually occurring in a grid area, a facility or a portfolio. Peakload is an hour block defined in advance. The real load peak may fall within it, but also outside it, for example in the early winter evening after 8 p.m. or during special industrial operating modes. Conversely, the peak block contains hours with low load, for example public holidays during the week. Peakload thus reflects typical weekday hours, not every actual peak.

Financial settlement and role in procurement

On the forward market, base and peak products are the most important building blocks. EEX describes its German Power Future as the most liquid financial power future in Europe. These futures are generally not physically delivered but financially settled (cash settlement). The reference is the average of the EPEX SPOT day-ahead prices for the German market area. For the peak index, only delivery periods between 8 a.m. and 8 p.m. on working days count. Physical procurement takes place separately via schedules, balancing groups and the spot market. There are also physically settled forward transactions, for example over-the-counter contracts.

Electricity suppliers, municipal utilities, industry and traders use the products for hedging, that is, price protection for future delivery periods. Because the products are standardised, they are comparable and easy to trade. A individually tailored profile would be less transparent and usually more expensive.

Actual consumption rarely matches base and peak exactly. Households consume more in the morning and evening, commercial businesses more during the day, industry depending on the process. Buyers therefore typically combine base and peak bands and balance the rest at short notice. The remaining deviation is called profile risk or structural risk. In addition there are volume risks, for example due to weather, production or customer switching, as well as price risks for open volumes. Base and peak reduce these risks but do not eliminate them.

Changed price structure due to wind and photovoltaics

In the past, peak was usually significantly more expensive than base, because more electricity was demanded during the day and more expensive power plants were needed. With the expansion of wind and photovoltaics, this pattern no longer holds reliably. EEX describes deeper price troughs at midday due to solar power, steeper price rises in the evening and growing differences between weekdays and weekends. Midday hours formally belong to the peak block but can be very cheap. Expensive evening hours after 8 p.m., by contrast, lie outside it. According to the exchange, classic base and peak futures remain important instruments. However, they were not developed for these new price patterns.

Exchanges therefore expand their offering. As of 2026, EEX offers for Germany and France, among others, the following products:

  • An extended peak block from 6 a.m. to 10 p.m., Monday to Friday.

  • Base weekend products for Saturday and Sunday.

  • A solar block from 12 p.m. to 4 p.m. According to the EEX website, it is announced for 2027.

  • For Spain, a peak block from 8 a.m. to 8 p.m. that applies from Monday to Sunday.

  • Futures on the daily spread between the most expensive and cheapest quarter-hours of the day-ahead auction. They are aimed at operators of battery storage systems.

This makes an important point visible: a battery storage system does not earn money from the difference between base and peak. It earns from concrete price differences between charging and discharging times, minus efficiency losses, charges and levies. For the valuation of flexibility, hourly or quarter-hourly prices and the residual load therefore count increasingly.

The distinction is also important for power purchase agreements (PPAs). A wind or solar farm does not deliver a base profile. If its generation is nevertheless converted into a fixed band, someone has to balance the difference. This happens through portfolio management, storage, flexible demand or purchases on the market, and it has a price. Anyone who uses "baseload" as a label for permanently available green electricity obscures these costs.

Typical misinterpretations

  • "The system needs baseload." The trading term does not imply a technical necessity for continuously running power plants. A power system needs, at all times, a balance of feed-in and consumption, sufficient firm capacity, reserves and grid stability. These functions can be fulfilled by various combinations of power plants, storage, demand flexibility, grids and imports.

  • "Base is the normal price, peak is the premium." This notion stems from a market in which high demand regularly coincided with high marginal costs. Today, hourly prices depend strongly on weather, fuel and CO₂ prices, grid bottlenecks and availabilities. A peak product can therefore be close to the base price or even below it.

  • "Forward contracts secure supply." They hedge prices but do not guarantee physical security of supply. What matters for that is balancing group management, availability of power plants and storage, grid operation and balancing energy. Financially settled futures do not deliver electricity in any case.

Assessment

Electricity is a time-bound good: the timing of each megawatt hour affects its value. The forward market bundles hours into tradable blocks. This simplifies trading and hedging but leads to deviations from actual demand. Suppliers, balance responsible parties and short-term markets have to absorb these deviations. Base and peak are therefore useful as long as it remains clear what they do. They describe standardised delivery times and structure price risks. They do not, however, say which power plant generates the electricity, when the real load peak occurs or whether the system is flexible enough.

Sources

Related glossary entries

Edited by eCMS on 11.11.2026 15:11

© 2026 Erik Schmidt. All rights reserved. Quotations with a link to the source are welcome.