Power Markets Are Moving Faster Than the Tools Designed to Manage Them
Day-ahead and intraday power markets have entered a period of sustained volatility. Renewable intermittency, electrification-driven demand swings, digital infrastructure loads, and the increasing participation of flexible assets such as battery energy storage systems (BESS) are compressing price risk into shorter and more complex time intervals.
Imbalance markets highlight this shift clearly. Deviations between forecasted and actual generation or load can trigger pricing dislocations within a single settlement window. For BESS operators, renewable developers, and commodity desks managing short-term exposure, many available instruments used for energy hedging were not originally designed to address such granular operational risks.
Traditional energy derivatives remain important. However, their structure reflects an earlier market environment characterized by longer risk horizons and comparatively lower real-time volatility.
Why Standard Futures Can Miss Short-Term Risk
Monthly or quarterly futures contracts aggregate multiple drivers into a single price: fuel costs, supply expectations, weather projections, macroeconomic conditions, and structural positioning. This makes them effective tools for structural or balance-sheet hedging.
It makes them less precise for isolating discrete, short-term events.
Consider a BESS operator exposed to a two-hour intraday imbalance window following a sudden wind forecast revision. Quarterly futures may be too broad. Even a day-ahead strip can embed unrelated price drivers into one contract, introducing basis exposure rather than isolating the operational risk.
This structural gap has created space for alternative contract design approaches.
Event Contracts: Instruments Built Around Defined Outcomes
Inframarkets introduces event contracts — standardized, cash-settled instruments designed to reflect specific, observable energy market outcomes.
Rather than aggregating expectations across extended delivery windows, each contract references a clearly defined event, such as:
- Whether a day-ahead price exceeds a defined threshold
- Whether an imbalance price crosses a trigger during a specified interval
- Recorded renewable generation within a defined hour
Each contract is structured around five core elements:
- A predefined payout structure (binary or scalar)
- A specified official data feed as settlement reference
- A fixed observation timestamp set at contract inception
- Standardized contract specifications
- A documented fallback framework addressing delayed or provisional data
For professional participants, this structure aims to isolate discrete risk factors rather than embedding broader macro exposure.
A Deterministic Settlement Framework
Settlement mechanics often introduce uncertainty in new financial instruments. The platform addresses this through a deterministic resolution structure.
Each contract resolves to the first officially published value from the designated data source (e.g., ISOs or TSOs) at the predefined timestamp. Reference sources and observation times are fixed at inception, and a documented fallback process governs delayed or revised data scenarios.
For institutional desks, predictability in settlement methodology is essential for integration into internal risk systems, compliance processes, and audit frameworks.
Integration with Professional Trading Infrastructure
The platform operates via a central limit order book model and provides API connectivity for systematic participation.
This allows trading desks to:
- Integrate event contracts alongside existing energy and commodity exposures
- Automate order placement based on operational triggers
- Connect positions directly into internal risk and portfolio management systems
The infrastructure is designed to align with institutional trading workflows rather than retail-style interfaces.
A Fully Collateralized Structure
The system operates on a fully collateralized basis. Participants must post sufficient collateral to cover the maximum potential loss of a position prior to execution.
This structure provides:
- Defined maximum downside at entry
- Pre-funded positions without margin call mechanics
- No forced liquidation triggered by mark-to-market volatility
- Settlement without unsecured counterparty exposure
For short-term energy exposures, clearly bounded risk parameters are often a structural necessity rather than a convenience.
Participant-Created Contracts
Unlike exchanges with fixed product catalogs, participants can propose event contracts using a pre-vetted library of approved data sources.
Participants can define:
- The observable event
- Threshold or payout structure
- Observation timestamp
- Settlement frequency
This approach allows desks with idiosyncratic exposure to design instruments aligned with operational realities instead of approximating risk through standardized products.
All contracts remain anchored to pre-approved data sources, maintaining settlement integrity regardless of contract origin.
Private Beta Phase
The platform is currently onboarding institutional participants during a private beta phase, focusing on trading desks, utilities, renewable developers, and power market liquidity providers.
The phased rollout allows participants to evaluate contract design, settlement mechanics, and system integration prior to broader expansion.
As volatility in day-ahead, intraday, and imbalance markets continues to evolve, demand for more granular hedging tools is increasing. Event-based instruments represent one potential approach to aligning financial hedging mechanisms with operational timeframes in modern power markets.
For additional information, institutions can consult official company channels:
X: https://x.com/Inframarkets
LinkedIn: https://www.linkedin.com/company/inframarkets/
Press releases or guest posts published by Crypto Economy have been submitted by companies or their representatives. Crypto Economy is not part of any of these agencies, projects or platforms. At Crypto Economy we do not give investment advice, if you are going to invest in any of the promoted projects you should do your own research.
