Dave Cockshott, chief commercial officer at Inenco, considers what the latest increases in transmission costs mean for businesses.
Spring has well and truly sprung, but my mind is already drifting to winter. More specifically, the three coldest half hours of winter, when demand is at its highest.
Triads – the three half hour periods when peak usage is highest between November and February – determine the cost of a business’ transmission costs, based on their consumption during that time. The 2015/16 costs were published earlier in the year, and on average have risen by 19% on last year’s prices.
For those businesses affected, an increase in network costs when other aspects of non-commodity costs are also increasing this month will be unwelcome news. However, the good news is that you’ve got six months before the next triad period begins – which is plenty of time to take action to prevent increases in 2016.
One of the simplest steps businesses can take is to make sure they are signed up to a triad warning scheme from their supplier or consultant, to fore-warn of an anticipated peak period and enable businesses to take steps to reduce their consumption.
The annual triad charge per region ranges from £23 to £46 for every average kVA. So even average reduction of 100 kVA during each of those periods will achieve £2,300 to £4,600 each year.
Businesses that can control their energy consumption during anticipated peak periods can avoid excessive costs for transmission but also distribution costs (DUoS) too. Distribution network operators work on green, amber, red and sometimes super red periods, with red and super red being peak demand time when the network is under most pressure – so these periods are significantly more expensive.
There are various methods that can be used to achieve load management. Let’s start with on-site generation. Many energy intensive businesses have alternative generation on-site that they can switch to when a triad period is anticipated, to avoid taking power from the grid.
If on-site generation isn’t an option then businesses need to look at ways to minimise the impact by turning their consumption down, for example by identifying equipment that can be turned down or off to reduce consumption.
Load management is becoming a serious focus, particularly with the introduction of several industry schemes that offer new revenue streams for businesses able to switch down when asked to help balance the grid, from DECC’s Demand Side Response scheme and National Grid’s DSBR scheme to the Electricity Demand Reduction pilot, which is expected to run a second phase.
Load management deserves some serious consideration – and there’s plenty of time to put in place plans for the next period. With the ability to both reduce costs and even earn revenue, doesn’t that put a spring in your step?
Inenco sponsored this post.