Utility Week

28 | 17TH - 23RD NOVEMBER 2017 | UTILITY WEEK Markets & Trading Market view E very winter, the period from November to February inclusive is used to identify the three highest half-hourly England and Wales demand periods that are sepa- rated by at least ten days – called triads. Triads matter to industrial and commer- cial energy users because they dictate how a significant component of electricity bills, the Transmission Network Use of System (TNUoS) charge, is calculated. And this year, TNUoS charges could surge to as much as £50,000/MW – continuing an upward trend that has seen charges double over the past five years. Consumer TNUoS charges are calculated based on their average megawatt consump- tion in these three triad half-hours, mean- ing those who can curtail their consumption during triads stand to avoid significant costs. Furthermore, a consumer who can gen- erate power on-site(s) can then export this electricity to the grid during triad periods, attracting further financial rewards. A criti- cal component in securing these awards – the embedded benefit – is set to be phased out at the rate of 33 per cent per annum start- ing from next year's 2018/19 triad season. However, with a legal challenge to Ofgem's decision now launched, delays or alterations to the cull may be forthcoming. Difficult to predict Over the past few triad seasons, many triad warning services that have previously managed to anticipate all three periods have failed to do so for the lowest or unex- pectedly early triads. Some services have responded by simply issuing many more triad alerts, increasing triad avoidance costs for consumers. So why is it getting harder to call triad periods? Many factors are in play, includ- ing increasing energy efficiency, UK winters tending to be warmer with fewer and less severe cold snaps, increased embedded gen- eration, bigger revisions from Initial Demand Outturn in S1 and S2 revisions, and even the load shedding and generation export actions of consumers in response to triad warnings. In short, the load shape is changing, pos- ing a new and evolving challenge to triad warning service providers and consumers. One approach to meeting this challenge is to try to model, and thus anticipate, these circumstances – and then factor them back in to the National Grid demand forecasts. VuePoint has taken a different approach and modelled the evolving England and Wales load curve directly with its own demand vs weather model to capture the changing shape. This allows it to simulate demand for the whole winter and not just the next few days, which produces a new level of accuracy and detail for triad warnings. This modelling approach uses proprietary demand forecasting information, rather than just taking the National Grid demand fore- cast, which is only updated every four hours. This enables forecasts to be generated not only for the level and timing of peak demand today and tomorrow, but also for the poten- tial demand profile and peaks for the entire winter using many carefully constructed scenarios of potential weather out-turns that reflect actual weather outcomes over the past 40 years, adjusted for climate trends. Each weather forecast and scenario- based forecast demand profile can be com- bined with the actual system demand to date and the three triads calculated applying the ten-day rule. The probability that today or tomorrow will turn out to be a triad is then calculated as the percentage of the simula- tions in which this was the case. Smarter triad avoidance As previously noted, consumers face increased triad avoidance costs as the num- ber of possible triad days and triad warnings rises. Using a yes/no/maybe warning service means taking the service provider's view of the triad risk level that results in a yes or a maybe alert. It is also opaque as to what the risk level chosen by the provider is – some red alerts will be a lot redder than others. Lack of any details of the warning prob- ability and the model or process used to generate these warnings leaves consumers guessing. But an approach that generates triad probabilities starting from 10am and day-ahead, and revises these up to 5pm on the day, can allow customers to carry out enhanced planning and implementation of triad avoidance strategies. Furthermore, they can develop more nuanced strategies that accurately reflect their avoidance cost struc- ture and risk appetite compared with other black box, binary triad alerting services. Avoidance actions can be planned ahead and refined right up to the half-hour that could be a triad when the best available information on out-turn demand and weather is known. Mike Coulten, senior business analyst, VuePoint Solutions Intelligent triad avoidance By modelling the England and Wales load curve directly with demand and weather data, the probability of there being a triad today or tomorrow can be calculated, says Mike Coulten. TRIAD PEAKS – LOWER AND CLOSER Highest-lowest triad spread, GW Peak demand, GW 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 62 60 58 56 54 52 50 48 46 44 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 Highest-lowest triad Trend Peak GW

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