TB2 and TB4 Spreads
The daily arbitrage value available to 2-hour and 4-hour batteries in the Day-Ahead market.
Understanding TB dynamics allows you to improve the pricing and risk management of BESS and other energy portfolios. Contact one of our analysts to discuss your needs and help you get to the top of the markets.
Contact usWhat is a Top-Bottom (TB) index?
A TB-index is a Top-Bottom index, which is calculated from the highest and lowest prices on a day in power markets. 'Top' refers to the highest-priced quarter-hours (or hours) of the day and 'Bottom' to the lowest, so TB2 measures the spread between the 8 highest and 8 lowest quarter-hours (2 hours on each side) and TB4 the spread between the 16 highest and 16 lowest (4 hours on each side) — hence the names.
How to incorporate TB product prices in an HPFC
TB prices provide market references for creating hourly and quarter-hourly price forward curves (HPFCs). By incorporating TB prices, the HPFC can be adjusted to ensure that the average spread between the highest and lowest within-day prices matches the TB reference price for each relevant month, quarter or year. This is achieved by stretching or compressing the curve profile to meet the TB reference price while maintaining an arbitrage-free forward curve.
Is the TB index a tradable product?
In the OTC market, the TB index has been used in contracts to hedge certain power price exposures. These products are primarily designed for hedging within-day price risks, which is relevant for BESS (Battery Energy Storage Systems) owners, suppliers and other market participants with shaped within-day production or consumption profiles. The European Energy Exchange (EEX) understood the wider need for this type of product and hence launched TB2 and TB4 futures on 21 September 2026. The new products are currently available for Germany (TB2), France (TB2), Italy (TB2+TB4), Spain (TB4) and Great Britain (TB2). Their settlement price is determined by day-ahead spot price differences between the highest and lowest 8 (TB2) or 16 (TB4) quarter-hourly prices on a day, averaged per month or quarter or year. In effect, this spread is the daily arbitrage revenue that a 2-hour (TB2) or 4-hour (TB4) battery with 100% efficiency could earn with perfect timing, which is what makes the products so relevant for BESS owners. For GB the calculation is on the equivalent hourly price differences. Other markets and other exchanges may follow soon with similarly structured TB products.
Are TB-products futures or options?
These TB-products are fundamentally different from existing futures products. The settlement (quarter-)hours of a baseload or peakload product, for example, are known a priori. However, these (quarter-)hours are not known for TB products, and depend on the market outcome itself, ex post. This settlement uncertainty means that TB-products are futures with an option-like element.
How can KYOS support you with TB prices?
TB prices can be integrated into the KyCurve forward curve builder to model hourly price forward curves (HPFC). Users can select TB prices and apply monthly scaling factors. KyCurve then adjusts the original forward curve to match the selected TB price levels while maintaining consistency with other market prices and preserving arbitrage-free conditions. Subscribers to the KYOS European forward curve distribution service can choose to receive HPFCs with or without TB adjustments, as well as with or without additional scaling.
How can KYOS support you with TB positions and risks?
TB2 and TB4 contracts can be captured as trades in the KYOS Analytical Platform, alongside your other power, gas and BESS positions. The products are marked to market daily against the latest TB forward prices, giving you an up-to-date view of mark-to-market (MtM) values and realised and unrealised P&L. TB positions are also fully included in KYOS risk analyses such as Value-at-Risk (VaR) and Profit-at-Risk (PaR), so you can see how they hedge the spread exposure of your batteries and other flexible assets, and how they affect the overall risk of your portfolio.