Electricity Triads 2022/23: what business energy users need to know
1 November 2022 | 5 minutes
The current energy landscape suggests that it’s more important than ever for business energy users to effectively manage this years’ Triad season. Find out all you need to know here.
With the current charging methodology coming to an end in March 2023, it’s the last time that business energy users can take considerable advantage through peak demand management to help reduce their costs.
The new charging methodology for transmission network charges (TNUoS) will be coming into force from April 2023, causing the vast majority of the TNUoS cost (i.e., the residual element) to shift from a demand to a fixed charge, based on a site’s connection agreement type (low voltage, high voltage, etc.) and annual consumption or Agreed Supply Capacity (calculated as an average over a 24-month period ending in October 2020).
The changes have come about as a result of the Targeted Charging Review (TCR), which is changing the way that residual costs are charged to make the system fairer, especially to those businesses unable to alter their demand to mitigate the impact of Triad calculations on their bills.
It’s worth noting that the current methodology will still be applicable to the locational TNUoS charge (which calculates the cost of power being added to the system at different geographical points). However, this is significantly less than the residual element (everything not calculated within locational charges) and means that the overall cost reduction opportunity for businesses will be far less than before.
What are Triad periods?
Triads are the three half-hour settlement periods of highest demand on the national electricity transmission system, taking place between November and February (inclusive) each year, separated by at least ten clear days. They usually occur in a half hour period between 4pm and 6pm on winter evenings, when industry demand and residential demand coincide, and tend to occur during the three coldest periods of winter.
National Grid uses the Triads to determine TNUoS demand charges for larger industrial and commercial customers with half hourly meters.
Triad charges: How are they calculated?
The Triads for each financial year are calculated at the end of March. Demand charges for the year are based on the half-hour demand tariff, which varies depending on which geographical demand zone you are located in. Your tariff is multiplied by your average demand (in kWh) during the three Triad half-hours.
How can you manage Triads?
National Grid does not forecast the Triads in advance, making it difficult for business users to predict when they need to dial down on energy use to reduce their effect. They are only known post-February, after the winter period has concluded, so some businesses work with suppliers and consultancies to try to forecast when Triads are likely to occur.
Industrial and commercial customers that manage to avoid consuming electricity in the three Triad periods don’t pay half-hourly TNUoS charges for the entire financial year. Many have become proficient in avoiding Triad charges by proactively reducing energy use during such periods by suspending or rescheduling production or temporarily switching to on-site generation, if it is available to them.
The reality is that most energy managers will be aware of Triads, how they are calculated and how to manage their energy over the winter period. However, Triads can be unpredictable and, at a time when energy market volatility has become a boardroom issue, it is more important than ever to seek expert advice to help optimise performance and minimise costs. The fact that this is the last Triad season under the current methodology, makes it sensible for businesses to think about the longer-term impact of changes to residual charges under the new regime as well as how to benefit from managing Triads in the short term.
The future will see changes implemented that are designed to ensure that costs are split fairly across business energy consumers. Although costs are changing, we are committed to helping businesses manage the impact. We are already working with some of the UK’s largest companies to navigate current and future changes in the market. From assisting with consumption analysis and harnessing historical data to guide businesses through an unprecedented period of change, our team of experts are here to help.
Being as energy efficient as possible is helping many companies to lay the foundations of better managed energy costs, while also moving ever-closer towards their decarbonisation goals. Flexible contract options also enable business energy users to take advantage of wholesale market movements.
At Shell Energy, we have committed to incorporating accurate TCR charges within our fixed price quotes. This provides businesses with peace of mind, price certainty and no unexpected surprises further down the line.
The time has never been better to review energy use within organisations to take advantage of efficiencies and adapt to the new charging requirements as well as the shifting supply landscape.
For more information, or to speak to a Shell Energy advisor, read about how we could help your business.