Why there is no single expiry to count down to
If your intuition comes from dated futures in financial or crypto markets, most of it does not transfer. A power future does not settle against a price on a date, it settles against the average spot price over a whole delivery period, so every contract is an interval rather than a point.
- Overlapping tenors trade at once
- A month, the quarter containing it and the year containing that are all live simultaneously and all cover the same hours. A forward curve is therefore plotted against delivery period, not expiry, and you have to pick a tenor before the x axis means anything.
- No cost of carry, so no carry basis
- Electricity cannot be stored, so nothing links a near contract to a far one through financing and storage. Curve shape is seasonal expectation — what it costs to deliver power in that specific window — not contango or backwardation.
- Long tenors cascade instead of expiring
- At expiry a year contract is replaced by its four quarters, and a quarter by its three months, at the settlement price. That forces each composite to equal the hour-weighted average of its legs, which is the only true no-arbitrage relationship in the curve.
- Convergence happens hour by hour
- A month contract keeps trading during its delivery month. Every hour delivered converts part of its final settlement value from expectation into a fixed number, so the price bleeds volatility progressively instead of snapping to spot at an expiry bell. This is the closest analogue to watching a premium decay, and it is the most interesting view below.
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