The latest forecasts from National Grid for electricity demand indicate that tomorrow’s (21st January 2020) evening peak will see the highest half-hour demand so far this winter, with approximately 49GW for the period commencing 17:30. As such, this is therefore likely to be one of the Triad periods used to set Half Hourly Transmission Network Use of System (TNUoS) charges.
These charges are levied on suppliers based upon their draw from the country’s transmission network and vary on a regional basis. In those instances where a customer is settled half-hourly, TNUoS is charged based on the average consumption in the three highest half hours of demand between November and February separated by 10 days. This is known as the Triad charge. Those customers that are not half-hourly settled pay TNUoS based on their usage on weekdays 16:00-19:00 throughout the year.
If a supplier contracts with a half hourly metered generator for their export, the generation within the Triad half hours is offset against the supplier’s Triad demand within the same Grid Supply Point (GSP) group and reduces the supplier’s TNUoS bill. Where the supplier does not have an offsetting demand, the export is treated as negative demand and the supplier receives a credit for the generation. For its part, the generator receives “embedded benefits” from the supplier given that the generation output allows the supplier to offset some of the TNUoS costs that it would otherwise face.
However, while Triad avoidance has developed as an industry in and as of itself, both the approach itself and the level of peak demand are in a state of flux. The value associated with avoided TNUoS has been progressively reduced by a succession of Ofgem-backed reforms – eroding the business case for such generation assets – while the ability of larger end users to avoid Triad exposure by decreasing demand or turning on generation over Triad periods has made forecasting such periods more challenging.
At the same time, the evolution of supply and demand scenarios at the national level has seen year-on-year erosion in peak consumption levels, again making it harder to predict. The pursuit of the 2050 Net Zero target and the decarbonisation of heat and transport alike could also mean that peak demand periods could move increasingly away from their traditional evening timeslot. This will, in turn, affect market participants across the board – be they suppliers, network companies, flexibility providers or generators. Such events highlight the prospect of a future where we will have to be smarter about how we manage and charge for the network because of the reactive and responsive assets connected to it.
These issues and more will be covered in Cornwall Insight’s ‘Tomorrow’s GB Electricity Markets – the Journey to Net Zero’ course, which is being held on 6 February in London. For more information on this course please click here. If you wish to learn more about our network charging forecasting service please speak to Dan Starman on 01603 604400 or d.starman@cornwall-insight.com
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