The Triad charging system is one way that large industrial users of electricity can reduce their energy charges by reducing consumption over peak periods. It also represents an environmentally-friendly solution for meeting peaks in demand compared to simply building ever more infrastructure. National Grid Revenue Manager Stuart Boyle explains the role of Triads and how they work.
Dealing with peaks in demand for electricity, particularly during the winter months, is one of the many challenges facing National Grid as system operator.
One important method of managing demand is the use of the Triad charging system – a tool that has been in place since the early 1990s and which is targeted specifically at large industrial and commercial users of electricity such as steelworks, cement factories and railways.
These customers have meters that measure their electricity consumption on a half-hourly basis – so-called half-hour metered demand – and how much they pay is determined by their demand during the Triads.
What are the Triads?
Defined as the three half-hours of highest demand on the GB electricity transmission system between November and February each year, the Triads are part of a charge-setting process. This identifies peak electricity demand at three points during the winter in order to minimise energy consumption.
However, Triads must be at least 10 days apart. This is to avoid all three potentially falling in consecutive hours on the same day, for example during a particularly cold spell of weather.
It is important to understand that National Grid does not forecast the Triads and they are not known in advance. Instead we use settlement data, which is a detailed analysis of demand after the event, to work out the Triads in the March following the ‘Triad season’. So in order to avoid charges, customers must avoid all potential peaks. This flattens the demand across the whole winter.
How Triads work and who pays
The total network charge paid by industrial and commercial customers under the Triad system is made up of two key elements – and here’s the maths bit…
Their charge for the year is based on a tariff ranging from £16 to £39 per kilowatt depending on where they are in the country. This is multiplied by their average demand during the three Triad half-hours. For example, boiling a 2kW kettle for two minutes gives an average of 0.044kW over the 90 minutes and therefore a network charge of around £1.50.
The Triads have no bearing at all on domestic consumers, including those with smart meters, because domestic charges are based on energy consumption between 4pm and 7pm every day throughout the year.
These are the figures, but what about the rationale for this whole process? What are the benefits to consumers and to Britain as whole?
Why Triads are a good thing
The Triad system is generally welcomed by large industrial users of electricity because they have an opportunity to reduce their overall energy bills. They do this by switching off plant at a time that might coincide with one of the three half-hour times of peak demand. If charges were based on energy use throughout the year then their bills would likely be much higher.
There are benefits too for Britain as a whole. It’s in all our interests to find the most efficient way of dealing with demand without building expensive infrastructure that ultimately costs each of us more through our electricity bills.
The ‘smoothing’ effect of the Triad system on electricity demand helps to keep our network running more efficiently. It also reduces the need for new generators and helps us to keep the necessary margin or buffer between supply and demand in terms of security of supply.
Dealing with unpredictability
Triads are determined by when peak demand occurs and 70% of demand is not half-hour metered, but instead comes from homes and small businesses. This means that how cold it is, when it gets dark and daily routine all have a big influence on demand.
The weather is an important factor because Triads usually coincide with cold snaps but the mild, wet winter of 2013/14 meant there was less variation in peak demand. There was therefore a bigger influence on Triads from half-hour demand and also the impact of embedded wind generation, which has the effect of offsetting some of the demand at certain times. Certainly, milder winters mean that Triads are less predictable using historical forecasting practices.
Many suppliers provide a Triad forecasting service designed to help customers on half-hour metered demand to reduce their bills. National Grid issues notice of a ‘tight margin’ between the available power stations generating energy and expected demand. But the market often responds to these notices by reducing demand, which reduces the likelihood of a Triad.
So, what does this mean for the consumer? Individual businesses may suspend early evening production between 20 and 30 times each winter to try to avoid the Triads and reduce their bills. However, the unpredictability of the Triads means there is no guarantee of avoiding infrastructure charges by doing this. It is really a commercial decision for individual consumers.
In summary then, Triads have been around for a long time and they do an important job. They help to reduce peaks in demand and so save the country as a whole from building more power lines and power stations, thereby reducing overall costs for all of us.
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