ERCOT Day-Ahead Market vs Real-Time Market — Key Differences
Key Takeaway
ERCOT's Day-Ahead Market clears hourly prices the day before. The Real-Time Market produces 5-minute prices during actual dispatch. Deviations from DAM schedules settle at RTM prices.
Quick Answer
ERCOT operates a two-settlement market. The Day-Ahead Market (DAM) produces hourly financially binding prices for the next operating day. The Real-Time Market (RTM) produces 5-minute prices during actual physical dispatch. Deviations from DAM-scheduled quantities settle at RTM prices.
Day-Ahead Market
- Bids by 10:00 AM CPT, clears ~1:30 PM CPT
- Hourly settlement point prices for the next operating day
- Financially binding on scheduled volumes
- Products: energy, ancillary services, PTP obligations
Real-Time Market
- 5-minute security-constrained economic dispatch
- 5-minute settlement point prices (averaged to 15-min for billing)
- Physical market — generators actually dispatched
- Deviations from DAM schedule settled at RTM prices
Two-Settlement Math
Net settlement = (DAM scheduled × DAM price) + (RTM deviation × RTM price). This structure allows DAM to serve as a hedging mechanism while RTM reflects actual conditions.
Basis Risk
When DAM and RTM prices diverge significantly — during weather events, outages, or sudden congestion — participants with RTM exposure face price risk. Industrial loads on index contracts are primarily exposed to RTM prices.
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Frequently Asked Questions
DAM prices are hourly, set the day before through a forward auction. RTM prices are 5-minute, reflecting actual real-time grid conditions. RTM is more volatile.
Yes. DAM settlements are financially binding on scheduled volumes. Deviations settle at RTM prices.
Bids close at 10:00 AM CPT; results published by approximately 1:30 PM CPT.
Still have questions about your setup? Talk to an engineer or call (210) 405-4248.