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Day-ahead trading of electricity refers to the buying and selling of electricity on the day before the actual production and delivery. Day-ahead trading either takes place on the spot market of the respective power exchange (often called day ahead market or day ahead auction) or through bilateral contracts between two parties - usually power trading companies - outside of the power exchange in over the counter (OTC) deals.

Power trading refers to purchasing and selling power between participants in the energy industry . Various forms of power trading are possible depending on the market design, ranging from short-term trading to long-term power purchase agreements.

The automatic Frequency Restoration Reserve (aFRR), also known as secondary reserve, is a reserve in the power grid that helps to keep the grid frequency stable. To keep the frequency within certain thresholds, the Transmission System Operators (TSOs) activate balancing services like aFRR, which they acquire from Balancing Service Providers (BSPs). Countries differ in their specifications but after European harmonization of the balancing markets, BSPs need to ensure that they provide the reserve within 5 minutes (Full Activation Time). As the secondary reserve, aFRR replaces the FCR gradually after 30 seconds, the mFRR, the tertiary reserve, supports or partially substitutes the aFRR after 12.5 minutes.

mFRR is the manual Frequency Restoration Reserve that helps to stabilize the frequency of the electricity grid. In most countries the TSO (Transmission System Operator) is responsible for its procurement and activation. The mFRR (also R3 or tertiary reserve) helps to restore the required grid frequency of 50 Hz (or in some countries of 60 Hz). This tertiary control reserve intervenes when there are longer lasting deviations in the power grid that cannot be resolved solely by the other upstream balancing services (FCR or aFRR). 

mFRR must be, according to the guidelines proposed by the European Network of Transmission System Operators of TSO in Europe (ENTSO-E), fully deployable after 12.5 minutes and has a minimum duration period of 5 minutes. Different auctions determine which Balancing Service Provider (BSP) holds back capacities and/or delivers the reserve in case of imbalances for each quarter hour.

To ensure the required grid frequency of 50 or 60 Hz (depending on the concerning country) the Transmission System Operators (TSO) of each country need instruments to maintain this reference value. These instruments are the balancing services. Balancing services are reactive short-term means to level out frequency deviations in the power grid. When frequency deviations occur, e.g. in consequence of a power plant outage, the Frequency Containment Reserve (FCR) intervenes automatically within seconds in the entire synchronous area to restore the balance between supply and demand. The FCR, also known as primary control reserve, is the first response to frequency disturbances. If the deviation persists, the Automatic Frequency Restoration Reserves (aFRR) subsequently replace the primary control reserve.

The European Union Emissions Trading Scheme, also known as ETS or EU-ETS, is an instrument for reducing greenhouse gas emissions at the lowest possible economic cost. Adopted by the European Parliament and the Council of the EU in 2003, it came into force on January 1, 2005. As of 2019, 31 European countries with around 11,000 emissions-intensive plants from electricity production and CO2-intensive industries participate in European emissions trading.

The Transmission Code 2007 is a set of rules in which the four transmission system operators define the conditions to access the German electricity grid. It was first drawn up in 1998 by the Association of German Grid Operators (now "Forum Netztechnik/Netzbetrieb" as part of the VDE) in response to the liberalization of the electricity market through the amendment of the Energy Industry Act (EnWG). The Transmission Code - sometimes also known as the Grid Code - defines the conditions for access to the German grid control network, since the 1998 revision of the EnWG (Energy Industry Act) implemented the separation of electricity generation, transport, and distribution ("unbundling"). The current German version was adopted in 2007; the European Transmission System Operators’ Association (ENTSO-E) is currently preparing a European version.

To turn national electricity grids into a large European electricity market, the various national transmission system operators (TSOs) need transit capacity for cross-border electricity trade. These border connection points, also called cross-border interconnectors, enable TSOs at international level to transfer electricity from one national grid to another. Only cross-border interconnectors can turn on-balance-sheet electricity trading into real, physical electricity deliveries. Their expansion is therefore a central starting point of the European Commission's electricity market policy and the implementation of the integrated European energy market.

Sector coupling has become kind of a buzzword in European energy businesses. Most commonly, it means replacing the traditional separation of the energy sectors of electricity, heating and cooling, transport and industrial consumption processes in favor of a holistic approach. 

Sector coupling aims at decarbonizing the national economy by converting the energy supply as completely as possible to electricity, finally reaching an "All Electric Society". A prerequisite for this is the use of the complete flexibility potential of producers and consumers as well as the storage of energy in its various forms.

In the first two decades of the 21st century, renewable energies have shown that they are able to cover an ever-larger share of the world’s electricity needs. It has therefore already been possible to decarbonize a considerable proportion of the electricity supply. The current main problem of sector coupling is to extend this success to the energy- and emission-intensive sectors of transport, heat supply, agriculture, and heavy industry. The most important economic goal from the perspective of climate protection is therefore to repeat the success of renewable energies in the electricity market by coupling all sectors of the economy that generate, consume and store energy. This sector coupling, primarily based on renewably generated electricity, should be able to make net zero CO2 emissions achievable.

The Electricity Balancing Guideline (EBGL) was created by the European Commission to establish and regulate the smooth exchange of balancing energy across the internal borders of the European Union. This guideline, which came into force as Regulation 2017/2195, sets the framework for the stabilization of the electricity grid throughout the European electricity market system. The aim is a pan-European market for system services with a harmonized market design and non-discriminatory trading of balancing energy without barriers between markets. As a result, TSOs will be able to procure balancing power more efficiently, more reliably, and cheaper.