Thursday 13 September 2018

DSR Glossary

If you don’t know your DUoS from your PPA, this glossary has put been together by the DSR experts at Energy HQ to explain the myriad terms that relate to Demand Side Response.

Arbitrage

In Demand Side Response (DSR) terms, this refers to trading (buying or selling) energy and then reversing that trade (or a portion of it) at a later time to take advantage of price differentials. For example, selling purchased energy back for a winter peak period, as a result of it not being required due to DSR practices. At Energy HQ (part of npower Business Solutions), this process is facilitated via the Wholesale Market Access service in conjunction with a range of supply contracts and flexible PPAs.

Access FFR

A service from Energy HQ that provides consumers and small generators with access to National Grid’s Firm Frequency Response (FFR) markets (static and dynamic). The minimum volume for aggregated participation is 0.1MW (otherwise 1MW).

Access STOR

A service from Energy HQ that provides consumers and small generators with access to National Grid’s Short Term Operating Reserve (STOR) market. The minimum volume for aggregated participation is 0.5MW (otherwise 1MW).

Aggregators

A collection of energy consumers able to pool their collective resources, for example to offer consumption reduction as part of a Demand Side Response initiative.

Automated Triad Service

A service from Energy HQ that can automate the delivery of Triad management to optimise the response a business can provide to increase Triad and other peak non-commodity cost savings.

Balancing Services

To help balance energy supply and demand, National Grid buys Balancing Services from consumers and generators who can flex (i.e. increase or decrease) their demand or generation from/to the grid. These services include Short-Term Operating Reserve, Firm Frequency Response and Demand Turn Up.

Balancing Services Use of System charge (BSUoS)

This is paid by energy suppliers to the System Operator (SO) for the cost of balancing the electricity system. It pays for the skills, tools and services the SO needs to balance supply and demand in real time. BSUoS charges depend on the balancing actions taken each day and are known after they have happened. This can be quite a volatile charge.

Battery storage

A means of providing flexibility to a consumer, generator or National Grid. This flexibility can be used for cost avoidance and/or generation optimisation or to participate in National Grid Balancing Services. Batteries can also act as uninterrupted power supply when needed, providing additional site resilience.

Behind the meter generation (BtMG)

Behind the meter generation, typically from on-site CHP or diesel stand-by generation, is used to reduce a consumer's metered consumption from the main network, allowing a site to respond to network operator price signals and contribute to other Demand Side Response services. Where permitted, BtMG may be able to export any excess. BtMG can also refer to energy (including that from renewables) that’s generated for use on-site via an internal ‘private wire’ infrastructure, so bypassing the need to connect to the distribution network.

Combined Heat and Power (CHP)

The production of both heat and electricity from the same device or power plant. CHP refers to the process, and can be used with any fuel.

Capacity Mechanism

The Capacity Mechanism (CM) is a scheme introduced by the government to help the UK meet our carbon reduction targets and ensure we have sufficient power available to meet future needs. It operates as an annual auction to procure the majority of the UK’s required energy capacity four years in advance (T-4 auction). There is a top-up auction one year ahead of delivery (T-1) to account for any changes in the T-4 generation stack or revised National Grid requirements. DSR is permitted to take part in both the T-4 and T-1 auctions. The cost of running the CM is passed through to consumers.

Demand Side Response (DSR)

This is a real-time intervention by consumers to reduce grid electricity demand at times of system stress, or to respond to network operator price signals – either by shifting demand, turning consumption down or switching instead to on-site generation. At certain times, DSR may involve turning consumption up too (see Demand Turn Up).

Demand Turn Up

Demand Turn Up (DTU) is National Grid scheme to incentivise large energy users and generators to either increase demand or reduce generation at times of high renewable output and low national demand. This typically occurs overnight and during weekend afternoons in the summer.

Distributed generation (DG)

Also known as embedded or dispersed generation, distributed generation describes an electricity generating plant connected to a local distribution network (including Behind the Meter Generation) rather than the main transmission network.

Distribution Network Operator (DNO)

There are 14 regional distributors throughout the UK. They are responsible for operating and maintaining the networks that connect electricity consumers to the national transmission system and provide interconnection with embedded generation. Find your DNO here.

Distribution Use of System (DUoS) charge

This is paid by suppliers to Distribution Network Operators (DNOs) for the cost of building and maintaining the local distribution network. Suppliers then pass on DUoS charges to consumers. DUoS charges depend on where on the local network you are, what voltage connection you need, when in the day you use the network and how much you consume. DUoS tariffs are published 15 months before the start of the charging year, e.g. tariffs for 2019/20 were published on 31 December 2017.

Energy HQ

Energy HQ is a dynamic new energy management service from npower Business Solutions. It brings together expertise, tools and technologies in all the key areas of effective energy management – from purchasing effectively to consuming transparently; from maximising efficiencies to reducing costs via active demand management. For more information, visit www.energy-hq.co.uk.

Frequency Response

Frequency Response services help National Grid meet its obligation to maintain system frequency at 50 Hertz (plus or minus 1%). If an event occurs – such as an unplanned outage at a power station or a sudden surge in wind power – National Grid then call on Frequency Response providers to flex their demand or generation to counteract the change and balance the system.

Firm Frequency Response (Dynamic and Static)

A specific Frequency Response product operated by National Grid to procure frequency management services from consumers/generators (for example, by reducing demand or utilising battery storage assets to track system frequency). Firm Frequency Response (FFR) comprises different types of response:

• Dynamic frequency response is a continuously provided service used to correct changes in frequency on a second-by-second basis.
• Non-dynamic (or static) frequency response is typically an ad hoc service triggered at a defined frequency deviation that will run until frequency is restored.

Providers can then choose to offer primary, secondary or high FFR contracts, depending on their flexibility

Grid frequency

This is a continuously changing variable that is determined by the second-by-second balance between system demand and supply (i.e. generation). If demand is greater than supply, the frequency falls. If supply is greater than demand, the frequency rises. National Grid has a statutory mandate to maintain frequency at 50 Hertz (plus or minus 1%).

High frequency response

This describes a response from a generation or energy storage asset to a National Grid Balancing Service (i.e. Firm Frequency Response) that’s within 10 seconds and can be sustained indefinitely.

Load management

The process by which a customer can actively manage their energy consumption by reducing or shifting demand from non-essential operations or equipment to respond to network operator price signals (see also Demand Side Response).

Low-carbon generator

This encompasses any source of low-carbon power generation, be it from a nuclear power station, a wind farm – or at the small-scale end, from a business or domestic property with solar panels on the roof.

Wholesale Market Access

A service from Energy HQ that allows consumers/generators to earn revenue at times of high market prices, either by reducing consumption or increasing generation. Wholesale Market Access provides a managed route to sell unused/extra volume on the Day Ahead and Within Day wholesale markets, and can be used as part of a wider DSR strategy or as a stand-alone DSR activity. This type of service can only be offered by suppliers who also have a trading function embedded within their business.

Non-commodity charges

These relate to any charge outside the actual cost of the energy commodity (i.e. electricity or gas) itself. For example, network and distribution charges and government levies such as the Climate Change Levy are all non-commodity charges.

Power Purchase Agreement (PPA)

This is, as the name suggests, an agreement to purchase power from a generator that is exporting power to the network. A PPA can be between a supplier and a generator, or a private arrangement between a business and a small-scale renewable generator.

Primary response

This describes a response from a generating or energy storage asset to a National Grid Balancing Service (i.e. Firm Frequency Response) that’s within two seconds, reaches maximum capacity within ten seconds and is then sustained for a further 20 seconds.

Secondary response

This describes the utilisation of customer flexibility to deliver a National Grid Balancing Service contract (i.e. Firm Frequency Response) that’s active within 30 seconds and is sustained for up to 30 minutes.

Smart Grid

A Smart Grid is an electricity network that can intelligently integrate the actions of all the users connected to it – generators, consumers and those that do both – in order to efficiently deliver sustainable, economic and secure electricity supplies.

Smart Meter

Advanced gas and electricity metering technology that offers customers more information about, and control over, their energy use – such as providing information on total energy consumption in terms of value, not only volume. Smart Meters also allow automated and remote measurement.

STOR

National Grid’s Short Term Operating Reserve (STOR) scheme utilises flexibility to either reduce consumer demand or increase generation. To participate, the flexibility must be delivered within 20 minutes of being notified and then sustained for up to two hours. Participants then earn both an availability fee plus a utilisation payment.

Strike prices

A predetermined value stipulating the value at which a trade will be completed. For example, an agreed minimum price whereby any spare energy volume will be sold back to the wholesale market (for example, as a result of participating in DSR). Or the guaranteed amount generators will receive for low-carbon energy under the Contracts for Difference scheme, with different amounts allocated to different technologies.

System Operator

The entity responsible for operating the main transmission system and for entering into contracts with those who want to connect to and/or use the transmission system. National Grid is the GB Transmission System Operator.

Transmission Network Use of System charge (TNUoS)

This is paid by suppliers to Transmission Network Owners (TOs) for the cost of building and maintaining the shared transmission network. TNUoS charges depend on your location, when you use the network and how much you consume. Most traditional Half-Hourly metered customers are currently charged on a Triad basis. Non-Half-Hourly metered customers are charged based on their profiled consumption between 4-7pm all year round. TNUoS tariffs are published by 31 January and take effect from 1 April each year.

Triad

This refers to the three half-hour settlement periods with highest system demand between November and February, separated by at least ten clear days. National Grid uses the Triad to determine TNUoS charges for customers with Half-Hour metering.

For more information on any aspect of DSR – or to find out how your business can benefit – please contact the DSR team at Energy HQ via EnergyHQ@npower.com or by calling 0800 994 9382.

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You can check out the DSR Clinic by Energy HQ on our site, here.