23 Nov 0
Companies can make real savings by cutting energy use during a few periods of peak demand. As winter approaches, temperatures fall and demand for energy rises. For many corporate energy users, this means prices rise too adding to operating costs. As with other commodities, gas and power prices are influenced by the balance of supply and demand; high demand brings high prices. Whilst prices vary seasonally over the longer term, over the short term fluctuations also occur which can see the market move as quickly as a significant rise in the evening which falls away overnight.
Energy pricing is also affected by a second factor. There is significant cost involved in building and maintaining the infrastructure that transmits from the generator to the consumer which is the element which is also influenced by peaks in demand. Securing capacity to cope with the very highest levels of demand is costly and the additional capacity often goes unused. For this reason, the distribution and transmission networks set their charges based on the amount of energy businesses use during the periods of peak demand. For larger customers, transmission costs are calculated using actual energy use on three of the highest days of demand each year, known as the Triads.
Triads are three half-hour periods of peak energy use between November and February that are used to set energy transmission charges for the year. Predicting when a Triad falls provides companies with the opportunity to reduce consumption until demand levels dip, which could also save money on the bill.
The difficulty comes in making an accurate prediction of when Triads occur as they are calculated retrospectively and regulatory rules mean there must be ten days separating each Triad. Indications from analyses of previous years’ data has demonstrated that triad periods are most likely to happen on a Monday with the most likely half hour period being between 5pm and 5.30pm. Although Triads cannot be predicted with 100% accuracy, reducing energy use at peak times will benefit companies even on non-Triad days.
Some larger businesses opt for ‘pass-through’ contracts, in which the rates they pay for transmission and distribution costs aren’t fixed up front, but instead calculated later based on how much energy they use in these periods. For these customers, any change in usage will have an immediate impact on the bill. Large customers on fixed contracts can also benefit by managing their peak energy demand. Energy suppliers take account of a business’s usage profile when calculating fixed energy prices so if a company reduces its peak demand during triads, it may be offered a cheaper contract at the next renewal.
The first step towards optimising the way in which your business uses energy is to measure its current usage pattern. Carbon2018 has a comprehensive software tool that provides businesses with the data and charts they need to analyse the use of electricity every half hour over set periods. Also our Targeting and Monitoring (T&M) service provides a weekly analysis of consumption for your half hourly supplies. This highlights unusual usage patterns which can then be investigated by one of our qualified consultants and swiftly corrected, leading to savings for your company. It also will provide energy usage over the triad period. Equipped with this information, businesses can adjust how the company works to ensure that non-critical energy use is minimised during the afternoon peak and moved to other times of the day.
As the gap between energy supply and demand is tightening, it is likely that pricing based on peak demand will play an increasingly significant role in the cost of business energy. Understanding how your business uses energy and how demand can be managed more effectively will therefore be a significant factor in reducing energy costs. For further information or assistance contact us at firstname.lastname@example.org or complete the contact form.