Energy trading is the business of buying and selling electricity, gas and oil, forecasting their prices and managing the risk. This page also covers the accounting of an oil well. A power plant does not simply send out power at a fixed rate. It sells its power, and the price can change from hour to hour.
A power producer in India sells in two main ways. The first is a long-term contract, called a power purchase agreement, usually with a state distribution company (discom), at a set price for many years. The second is a power exchange, such as the Indian Energy Exchange. There, sellers and buyers bid for each 15-minute block of the next day, or of the next few hours. Electricity is hard to store, so its price swings more than the price of most goods. It is low at midday, when solar plants produce a lot, and high in the evening, when people come home.
Say a coal-fired plant in Chhattisgarh has 200 MW that its contract buyers will not use between 6 p.m. and 10 p.m. tomorrow. Its trader offers that power on the exchange at ₹7 a unit, and a unit means one kilowatt-hour. If the price for those hours settles at ₹8, the plant sells 800 MWh, which is 8 lakh units, and earns ₹64 lakh. If the price settles at ₹5, the offer is not accepted and no trade happens.
This scene covers the work around those trades. Power market modelling estimates future prices years ahead. Energy market research publishes forecasts. Commodity data management gathers the price feeds. Energy trading and risk management (ETRM) records each trade and measures what it could lose.
The last two products are mainly North American. Tax equity financing software models how a clean-energy project in the United States is paid for, and India has no market like it. Oil and gas accounting software keeps a well's books. It is used mainly in the United States and Canada. In the United States, landowners usually own the oil and gas under their land. In Canada, the provinces own most of it, and other owners, such as companies, hold the rest. In India, the government owns it.
Prices that move with demand are a daily fact for power, and they follow the logic of dynamic pricing. Matching supply and demand second by second is the work of grid balancing. Traders also protect themselves with derivatives.