Baseload vs Peakload Products
Baseload delivers all hours; peakload focuses on high-demand hours. Shape risk is the difference between them.
Baseload products cover every hour in a period, while peakload contracts cover only specific hours (e.g. weekdays 08–20).
The same underlying spot process can generate very different average prices for base and peak blocks.
Risk management must track base–peak spreads, because shape changes even when overall level stays similar.
This diagram shows hourly spot prices for a stylised day and the average price of baseload (all hours) and peakload (selected hours). Use the controls to change intraday shape and peak block definition and see how the base–peak spread moves.
Baseload is the 24-hour average of the spot curve, while peakload averages only the high-demand window. The same spot process can give very different base and peak prices if intraday shape is strong.
From a risk perspective the key object is the base–peak spread: it measures shape risk rather than level risk. Hedging a peakload exposure with baseload futures leaves you exposed to changes in that spread, even if the overall level of the curve does not move much.