5 Reasons for UK Companies to Closely Track 2020/21 Triad Season

October 29, 2020

It’s that time of the year: The next Triad season is on and will run from the 1st November 2020 to the 28th February 2021. During this time, National Grid tracks peak electricity demand periods, which are used to calculate the UK’s regional transmission charges. For many consumers, the cost of their transmission charges has risen greatly in the past years and is no longer a charge which can be ignored. Businesses that are able to successfully forecast and reduce demand during a Triad can unlock great savings. However, knowing when Triads occur can be complex, especially in these times of unprecedented disruption. Our experts have collected 5 reasons why this Triad season is one to keep an eye on.

Contributed By: Attila Bekefi, Solutions Consultant, Schneider Electric Energy & Sustainability Services

Attila works as a Solutions Consultant in the EMEA region focusing on regulatory and legislative developments in Europe and how these affect companies' future goals, from cleantech and demand response investments to long-range energy cost planning.    

Understanding the UK’s Triad Scheme

The Triads are the three half-hour periods of highest demand across the UK’s electricity transmission system between 1 November and 28 February each year. National Grid uses the Triads to determine the Transmission Network Use of System charge (TNUoS) - demand charges for customers with half-hourly meters. Reducing demand at these specific points will result in lower transmission charges for the respective metering point.

The TNUoS charge recovers the allowed revenue for Transmission Owners for the cost of building and maintaining transmission infrastructure. This charge has risen significantly over the past few years across all regions for several reasons:

  • The combination of increased renewable generation, especially the cost of offshore wind grid construction, together with maintenance and investments to the grid.
  • A cap system to limit the charges from generation has led to a higher proportion of charges from demand.
  • Decreased total demand impacts the cost allocation mechanism that recovers the allowed revenue across the total Triad demand.

 A comparison between the 2020/2021 charges to 2013 shows an average increase of 79%, while in comparison to the previous year rates largely remain the same.

Navigating the nuances of Triad forecasting

Triad days can vary but usually fall on a Monday, Wednesday or Thursday. In the past, 87% of Triads have fallen on these days. Triad periods have frequently occurred in the months of December and January. This does not include the Christmas period when demand in the UK usually decreases for a fortnight. Triads regularly occur during the time between 5:00-5:30 pm, however, after the 2015/2016 season we saw the 2nd peak at 6:00-6:30 pm, which indicates heightened demand response activities in projected peaks, pushing the resulting peaks either forward or backward compared to the regular expected periods.

It must be noted that although historical statistics show similarities, they cannot be used to properly indicate future times of peak demand. The future energy landscape is predicted to see consistently lower demands, increased demand-side response and further embedded generation. This is specifically true for the 2020/21 season, making the task of forecasting these events even trickier.

Here are five reasons why 2020/21 will be a very special Triad season:

  1. COVID-19 pandemic The effect of the pandemic this winter on UK demand introduces a high degree of uncertainty compared to previous years. Observations from the summer show that demand during the day is suppressed more than overnight and in the evening. According to National Grid’s dataset at the height of the pandemic, average demand on the electricity system dropped by as much as 18%, however, for peak hours it shows just above 6%. In the current situation, life is still not back to normal and uncertainty in the daily demand forecast remains.

  2. More wind energy generation Most of the wind power generation capacity is connected to the Grid so it does not impact demand. However, around 6 GW (~30%) of wind capacity is embedded – meaning it is connected to local distribution networks. As a result, it can influence outturn demand. Embedded wind generation and curtailment of demand in the half-hourly sector will impact demand during the winter period. Past winter demand did not fluctuate across a wide range during winter months, leading to an offset of demand from generation and curtailment. Particularly windy periods can significantly boost local supply provision to demand which are not apparent in the national demand calculation.
  3. Demand is response on the rise Many UK companies have already resorted to onsite generation and demand-side response. The Association for Decentralised Energy (ADE) calculates that 16% of the UK’s peak electricity requirement – or 9.8 gigawatts (GW) – could be provided by businesses being flexible in their energy demand. While a large portion of this potential still remains untapped, the effect of joined load shifting activities has already been detected during past Triads. With many consumers shifting loads during Triads, the system gets more dynamic and forecasting needs to consider the shifting demands.
  4. Interconnector Activities Great Britain’s baseload forward prices are currently higher than those in continental Europe, therefore we expect import activity predominantly from those markets over the interconnectors. Historically, during peak hours we have seen exports to Ireland and Northern Ireland and net imports from Europe which are likely to remain in the same direction, however, in the case of particularly windy weather coupling with suppressed demand, the flow might entirely offset from across the Irish Sea. Interconnector flows are expected to be unaffected by the end of the EU Transition Period and to continue to reflect ordinary default price spreads between Great Britain and Europe.
  5. Weather The impact of cold weather on peak winter demand should not be underestimated. Triad periods regularly fall on cold snaps, particularly if snow or heavy frosts occur. Over 70% of demand is from domestic and small business usage which means when it gets cold and dark the chance of a Triad is increased greatly. Recent winter weather conditions turned out to be milder than average, with significant positive temperature anomalies and very little snow in most of the UK. Most forecasts currently favor similar scenarios for winter 2020/21. However, recent research has found that there is a one-in-three chance of record-breaking rainfall hitting parts of England and Wales each winter with the impact of climate change. How extreme weather conditions will impact demand patterns needs to be tracked in the coming seasons.

Next steps and recommendations

The ongoing market transition, together with the success of Triad avoidance in reducing costs for the end-user, has forced regulator Ofgem to undertake a change to the charging methodology for distribution costs. The Targeted Charging Review aims to introduce a charge that Ofgem considers is fair to all consumers and not just those able to reduce consumption during peak periods. Under current proposals, Triads would change to a fixed or agreed capacity, eliminating the need for avoidance in the future. The replacement of the Triad scheme will change how businesses benefit from peak avoidance. However, for the next two years, the calculation methodology for transmission network charges will remain as described. Companies considering investments in demand response technology need to take action now to secure paybacks within the remaining two years.

For more than 10 years, Schneider Electric has been helping clients with Triad Alert Service to forecast the likelihood of any particular day being a Triad. Warning notifications throughout the season help companies to reduce their own electricity demand on the days of high system demand, when it is likely a Triad could occur. These well-managed Triad reduction programs have achieved transmission cost savings above 90%.

The Triad season begins on 1 November. To find out more about our Triad Alert Services and understand your potential savings, contact us today to talk to our dedicated expert team.

 

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