Explaining to a lay person the Triad system of calculating how much consumers pay in electricity transmission charges often results in disbelief.
Yes, National Grid really does charge for its main service based on what customers consume during just three non-consecutive half hours between 1 November and the end of February each year.
Yes, you have to guess when these half hours might be – as you don’t know until after the winter is over.
Yes, large consumers try to forecast these Triads, so they can then reduce demand during suspected periods and save on charges.
Yes, the difference between a correct and an incorrect guess can result in hundreds of thousands in extra charges.
Yes, this unusual state of affairs really does save the UK the equivalent of having a large coal power station on standby to cope with peak demand over the winter.
The good news is with the right intelligence, large consumers can often tell when to react. (The not so good news is that the many businesses that benefit from this system will soon lose out – of which more in a minute.)
Another year of success
Our Triad Forecasting Team looks at all the variables over the winter season and predicts when it thinks a Triad might occur – so that customers using our Triad Warning Service can respond, and reduce demand accordingly.
National Grid this week announced when the three Triads for the 2018/19 winter season occurred:
- Thursday 22 November 2018 at 1730-1800
- Monday 12 December 2018 at 1730-1800
- Wednesday 23 January 2019 at 1800-1830
Once again, we correctly forecast all three.
Lowest demand for 23 years
As well as looking widely at all possible influences – from the weather to industrial activity – each season presents its own unique challenges.
This winter was relatively warm and some of the earlier cold spells were quite brief and fell at the weekend.
This meant the level of demand at which we decided to call potential Triads remained relatively low throughout the season.
Indeed, the 2018/19 Triads occurred at the lowest levels of demand since the winter of 1995/96.
Fortunately, the end of the season was in stark contrast to last year, where we experienced the Beast from the East. As a result, we didn’t make any Triad calls after 11 February.
Triad days are numbered
As you are no doubt aware, Ofgem is planning to alter the methodology by which National Grid calculates its Transmission Network Use of System (TNUoS) charges.
As part of its current Targeted Charging Review (TCR), the energy regulator is looking instead at ways to spread the cost more evenly across all consumers via a more static charge.
This means that those who currently Triad manage are likely to lose this opportunity (although other opportunities for flexible energy management will emerge).
Ofgem is expected to announce its final decision this summer. Then once agreed, the changes are likely to be introduced by April 2021, with a possible phasing period delaying full implementation until April 2023.