Energy
Triad

Extra year of Triads following further Ofgem delay

With winter quickly approaching, the Triad season is soon to begin.

Thursday September 23, 2021

With winter quickly approaching, the Triad season is soon to begin. This is an important time for many large UK consumers, as they seek to lower transmission costs by reducing demand during potential Triad periods.

Triads are three half-hour periods with the highest electricity demand between the start of November and the end of February. Each Triad must be separated by at least 10 clear days. This means consecutive days of high demand won’t result in multiple Triads.

If your electricity contract allows it, reducing your demand at these specific points will result in lower transmission charges. However, knowing when Triads occur is a complex business. To help our clients, EIC provides a Triad Alert service. We have successfully forecast each of the three Triad periods for the last 9 years. By predicting Triads each winter, EIC has saved customers millions of pounds in transmission charges.

Triads granted an extra year

In May 2021, Ofgem launched a consultation on the Transmission Demand Residual (TDR) part of the Targeted Charging Review (TCR). While the results of the consultation are yet to be published, the minded-to decision is to delay the implementation until April 2023. This would create an extra opportunity for consumers to benefit from Triad avoidance over the 2021/22 and 2022/23 Triad periods.

The TCR aims to introduce a charge that Ofgem considers to be fair to all consumers and not just those that are able to reduce consumption during peak periods. From April 2023, the residual part of transmission costs will be levied in the form of fixed charges for all households and businesses, with the latest forecast figures below. For the majority of consumers, these changes will lead to a reduction in transmission costs. However, for those who are currently taking Triad avoidance action, it is likely that their future costs will rise.

TCR fixed charging bands
Table 1. TCR Fixed Charging Bands with latest TNUoS forecast (National Grid, May 2021)

Uncertain winter ahead

Gas and power prices have increased significantly throughout the summer due to maintenance issues, a global gas market surge and low renewable output. As temperatures fall leading into winter, gas and power demand will inevitably increase and put more pressure on prices. There are particular concerns around extended periods of cold weather with low wind, which will create tight margins and cause day-ahead power prices to spike. It is during these periods that Triads are more likely to occur.

Last winter saw the first increase in peak demand since 2014/15 and the largest year-on-year increase since 2007/08. There were a number of factors which contributed to this, including lower temperatures, a reduction in demand-side response (DSR) and an increase in domestic consumption. An increase in Covid-19 cases over the winter may lead to a return to working from home, which could again lead to an increase in peak demand. However, if Covid-19 cases remain stable then there could be an increase in DSR as more businesses look to avoid Triads while they still can.

EIC track record of success

EIC has an in-house model which has successfully forecast every triad period for the last nine years. We issue clients with comprehensive alerts advising them when a Triad is forecast, so they can reduce consumption accordingly.

Our Triad Alert Service forecasts the likelihood of any particular day being a Triad and sends alerts before 10am. This gives businesses time to take informed action to avoid high usage during these half-hour periods, while minimising disruption to their everyday activity. In addition, we monitor the market throughout the day and in the event of a significant change we will send out another alert in the afternoon. The daily report can also help you plan ahead with an overview of the next 14 days, alongside a long-term winter outlook.

Calling an alert every weekday would generate a 100% success rate, however EIC recognises the negative impact this could potentially have on our clients. Organisations would incur major damage to revenues if required to turn down their production each day for four months, ‘just in case’. At EIC, our aim is to provide as few alerts as possible. Over the 2020/21 Triad period we called just 14 red alerts, comparing favourably against a supplier average of 20 alerts.

Trad record for 2020/21
Table 2. Triad record for 2020/21 – EIC vs. suppliers

How we can help

We have helped hundreds of clients to avoid these transmission costs by providing them with the tools they need, giving EIC an enviable track record in Triad prediction. Our analysis has found that clients who take direct action to avoid Triads based on our alerts save an average of 20%, which represents an annual saving of £26,000. The Triad season begins on 1 November. Find out more information about our Triad Alert service .

EIC can also help you to accurately budget and forecast your energy prices with confidence, with our Long-Term Forecast Report. Our team of specialists work hard identifying trends, examining historical figures and forecasting for the future. The Long-Term Forecast Report is a valuable tool which illustrates the annual projected increases to your energy bills and calculates your energy spend over the next 5, 10, 15 or 20 years. This allows you to confidently forward budget and avoid any nasty surprises. Whilst we can’t prevent the rise of non-commodity charges, we can ensure that you are fully prepared for any increases.

To find out more about our Long Term Forecast Report or to discuss your Triad concerns, contact us today.

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