In the energy business, a spot market is a commodities market in which the commodity is sold for cash and is delivered to a specific location for a specific time period that occurs on the day of the sale or on the day after the sale. Contracts bought and sold in a spot market are effective once agreed to. In electricity markets, spot markets may include day-ahead energy, intra-day energy, and/or real-time energy depending on the market structure. Natural gas spot markets are typically for day-ahead transactions (or even multiple days ahead on weekends), although some intra-day spot trading does occur.
Typical market participants in spot markets include wholesale marketers, brokers, suppliers such as gas producers and electric generators, utilities, large consumers, and retail marketers. Spot transactions are often performed using centralized exchanges or, in certain regions of the world with Independent System Operators (ISOs), using electric markets.