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Another triad hat-trick. How is it done?
As the industry mulls over what to do about escalating peak charges, Flexitricity has been getting on with the day job. Once again, we correctly called all three triads.
Triads are National Grid’s way of recovering the cost of the electricity transmission network while simultaneously encouraging industrial and commercial customers to take the load off it at the most critical times. Since different electricity users have different costs, they all have different views as to how often they can act to reduce load. The triad system is cleverly designed to encourage people to focus on the peaks and respond to the conditions. It’s been cutting winter peak load by about 2GW for several years now, and Flexitricity has the best record in the industry for correctly picking out those peak periods.
In a change to recent years, winter 2016/17 turned out to be relatively easy to call. We started triad management relatively early due to a cold start to November. After that, there were clear short periods of low temperatures which made the peaks stand out and gave clear signals as to when we should run – 5th December was a clear triad.
The rest of the market saw these signals too, and as a result triad management was fairly consistent across the industry. One exception was during mid January, when each day’s demand was similar to the previous day’s; we came close to running every day. In the end, that week was overshadowed by the 23rd January, which became triad number two.
There was a close contender for triad number three on 9th February, an unusually late candidate. In the end, 5th January claimed the last place. With the lengthening days, peak demand dropped off markedly during the rest of February, and no further triad action was required.
All of the triad peaks fell on the nation’s favourite half hour: settlement period 35, also known as 5pm to 5:30pm. In recent years we have seen significant smearing of those peaks, and on some days it looked like the peak would end up split into two, with each being a contender for a triad. But so far, the time of day of the triad peak has remained conventional. This is just as well: wide peaks and double peaks simply create more running. For fuel burners, that means burning more fuel.
We’re very pleased with the improved data flows which Elexon now provides. This makes real-time triad forecasting more reliable, reducing the number of unnecessary runs. We think that many industrial energy users are making last-minute triad decisions rather than sticking to advance warnings from electricity suppliers. Because these warnings come either the day before or on the morning of the day in question, the usefulness of them declines with every improvement in real-time data. The effect of this is to make National Grid’s forecast of some peaks too high, which makes day-ahead triad forecasting unreliable.
This year, the sharp weather changes meant that day-ahead triad managers came out fine, in the main, despite that problem. In future, however, we think triad management is going to be increasingly a to-the-wire activity, requiring people to be on site and focussing on electricity industry data during winter afternoons and evenings. This is burdensome for many, and it’s a burden that Flexitricity is there to carry.
Ofgem is now set on having a targeted charging review, and the triad system will be a major focus of this. Already, we are likely to see a gradual phasing out of triad value for generators whose output goes off site and into the distribution network. But there’s still three years left to run. During that time, it’s quite possible that removing these export triad benefits will prove to be tough on winter peaks, and we’ll see a reversal of the gradual decline in peak demand that has been happening since 2008. If that happens, the charging system will have to be reconsidered against the effect on system security. Meanwhile, Flexitricity will be getting on with the day job.
Written by Dr Alastair Martin, Founder and Chief Strategy Officer at Flexitricity