Triad demand rises despite winter lockdown
Triad dates have now been confirmed and this winter saw the first increase in peak demand since 2014/15. What does this mean for consumers?
National Grid have published the three Triad dates for the 2020/21 season, which are listed in the table below. For a ninth consecutive year EIC has successfully called an alert on each of these days.
EIC hit all three Triads with only 14 Red alerts issued.
There was an increase in the number of Triad calls this year with 24 alerts issued in total. This compares favourably with other suppliers who called an average of 30 alerts across the Triad period.
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 consumers are able to respond to Triad alerts by reducing demand then they will be able to lower their final transmission costs.
First increase in peak demand for 6 years
This winter saw the first increase in peak demand since 2014/15 and the largest year-on-year increase since 2007/08. There are a number of factors which contributed to this including lower temperatures, a reduction in demand-side response and an increase in domestic consumption. While peak demand increased from last winter, average demand decreased by around 2%.
The rise in coronavirus cases at the start of the winter led to the Government imposing further lockdown measures. This led to a reduction in the number of businesses reacting to Triad calls and reducing demand at peak times. Our analysis has suggested there was up to 1GW less demand-side response than the previous winter. The lockdown also signalled a return to home schooling and working from home which subsequently increased domestic consumption. This increase was mainly driven by lighting and heating which are typically less efficient in homes than in schools and businesses.
The trendline below shows that weekday peak demand over the Triad period increased by an average of 0.5GW for every 1°C decrease in average temperature. Some of the variation in the graph can be explained by the two national lockdowns that were in place over most of the Triad period. Our analysis of the temperature-corrected data has shown that peak demand increased by around 4-5% once lockdown conditions were lifted in December. This coincided with a drop in temperatures leading to the first Triad on 7th December.
Cold January leads to increase in demand
The Triad season started with long periods of mild weather during November and most of December. Temperatures fell after Christmas which led to the coldest January since 2010 and the second coldest in the past 24 years. This is in stark contrast to January 2020 which was the second mildest in the past 30 years. Across the Triad season eight weekdays had an average temperature below zero, all of these occurring after Christmas. This compares to none the previous winter and only two for the 2018/19 winter.
The graph below shows that the first Triad fell on the only day before Christmas with an average temperature below 2°C, while the second and third Triads occurred during longer cold spells during the start of January and February. Wind generation continued to have an impact on peak demand as embedded generation is not connected to the grid and is instead seen as a drop in demand. All three Triads occurred on days when wind generation was less than 5GW as the drop in demand from embedded wind generation was reduced.
TCR Final Decision
In December 2019 Ofgem published their final decision on the Targeted Charging Review (TCR), although the implementation date has since been delayed by a year due to the coronavirus pandemic. The main outcome of this decision is that from April 2022 the residual part of transmission and distribution charges will be levied in the form of fixed charges for all households and businesses. This means that there is one final chance for consumers to benefit from Triad avoidance over the 2021/22 winter period.
The TCR aims to introduce a charge that Ofgem considers is fair to all consumers and not just those able to reduce consumption during peak periods. 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.
Impact on Consumers
The graph below shows the average % change in DUoS and TNUoS costs across each region and meter type as a result of the TCR. Our analysis has found that most half-hourly (HH) sites will benefit from a fall in costs, however most domestic and non-half hourly (NHH) sites will see a small rise in costs. Southern areas will typically benefit from a larger decrease in costs than northern areas.
Consumers currently taking Triad avoidance action are likely to face an increase in TNUoS costs from Apr-22 as the effect of Triad avoidance is removed. Likewise, sites that have a capacity level set too high will also not benefit from the same level of cost reductions shown below as they are potentially placed in a higher charging band.
How EIC can help
With the confirmation that from April 2022 residual charges will be calculated using a capacity based methodology, now is the perfect time to undertake a capacity review on all of your HH sites. EIC’s Capacity Review service is a fully managed end to end offering. We undertake detailed analysis for each of your sites, outline potential savings and offer clear advice on what action you should take. If we find that your capacity can be reduced by more than 50% it may also be possible to apply for a charging band reallocation which could significantly cut your future DUoS and TNUoS charges.
EIC can also help you 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 you are fully prepared for the increases.
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