Despite the recent hike in commodity costs coupled with the continuing rise in non-energy costs, there are still things that can be done to both reduce and mitigate the impact of the Triad season. Jonathan Guy, Kinect Energy Director, UK & Ireland, gives his top tips to help avoid charges.
Avoiding Triads, simple but effective…
As we head in to the 2018/19 Triad Season (November to February) demand costs are still on the rise for many. According to recent figures released by National Grid, in 2019-20 the average gross half-hourly demand tariff will be £50.75/kW rising to £65.27/kW in 2023-24 which equates to an increase of nearly 30%.
For an average business user, Triad costs represent approximately 4 – 5% of the total cost of their electricity and this trend is scheduled to continue for at least the next 5 years (see graph above).
It is possible to significantly reduce the impact of paying Triad costs and thus help to avoid some of these hikes.
By subscribing to a Triad Forecast Alert Service and establishing on site processes to respond to these alerts through demand turn down initiatives or using onsite generation/UPS assets to replace imported power from the network.
Alert services are available from a number of different sources but the challenge has always been that, in order to guarantee that any down turn activity will result in a saving, most take a sweeping approach to issuing Triad warnings to increase the likelihood that the triad slots will be hit (some providers publish more than 20 alerts during one season). However, Kinect acknowledges that responding to Triad warnings has an operational impact on your business which can outweigh the potential cost saving benefits. Consequently we have worked hard over the years to fine tune and calibrate our models to improve the accuracy of our Triad forecasting resulting in the number of alerts we issue being kept to an absolute minimum.
For Winter 2017/18, Kinect’s own Triad Alert service successfully predicted each of the Triad days whilst limiting the number of alerts, and therefore days disrupted, to only 11 notifications.
Explore opportunities for other Demand Turn Down initiatives
Unless onsite processes or shift patterns can be adjusted or rescheduled at short notice, avoiding triad charges typically requires the consumer to have access to some means of onsite generation or UPS. Where sites have access to these types of assets, additional opportunities to avoid cost or access additional lines of revenue to offset energy budgets also exist including the National Grid’s Demand Side Response (DSR) program
DSR supports the nation’s transmission system during times of high stress; guaranteeing generation capacity when margins are tight; and reduces the need for investment in new, large, infrequently used generating plants.
Kinect works with its customers offering them the ability to manipulate the quantity of power drawn from the grid when UK demand is high. Offering flexibility to the country’s transmission system to support with grid balancing potentially provides an additional revenue stream. For one of our customers we successfully set up a DSR solution for them delivering in excess of £120k in savings and revenue, annually.
Optimisation activity pays its way
By simply measuring, monitoring and maintaining the implementation of best practice methods can deliver significant savings.
· With other Non-Commodity Costs also on the rise, although the unit rates for distribution and transmission charges are a non-negotiable element of the electricity price stack, by simply having an awareness of seasonal fluctuations in prices like peak Red Zone charges, the opportunities to reduce their impact is increased substantially. Kinect can help you measure and monitor the impact of these charges which means that opportunities to actively manage, and therefore mitigate the costs, are significantly improved
· Some other basic good housekeeping techniques can be surprisingly effective in keeping costs under control; the best example is a periodic review of Available Capacity levels for each of your sites. Although you may have done this before, scheduling an annual or bi-annual check is a must to ensure that you are not paying for capacity that is not required or equally paying excess capacity charges for any breaches of the agreed capacity levels. Kinect are able to provide a regular comprehensive review of Available Capacity charges as well as offer support in ensuring adjustments are implemented with relevant DNOs and accurately charged by your supplier.
· Check to see if you are eligible for any exemptions or compensation via Climate Change Agreements (including Min Met), EII RO FIT exemptions and other schemes which, depending on qualification criteria, you may benefit from. Kinect’s Carbon Compliance team is one of the most experienced in the UK market and will happily review these with you.
Use mandatory and voluntary compliance schemes to drive long term change – if you don’t use it, you won’t pay for it!
With schemes like ESOS and the new SECR to name but a few you are mandated to comply with measuring, monitoring, auditing and reporting on carbon and energy efficiency initiatives. When the old adage of ‘the cheapest kWh is the one you don’t consume’ being as relevant as ever, don’t just carry out a ‘tick box’ qualification exercise to meet base level compliance. There is considerable commercial justification to use the opportunity that such schemes present to do the job properly with the aim of delivering long term energy efficiency gains which will deliver bottom line costs savings and emission reduction benefits. Kinect have considerable capability in these areas and regularly see average savings of 10 – 25% on bottom line costs as a result of the work they do.
If you don’t have the time, knowledge or resource to do this yourself, the team at Kinect Energy would be delighted to support, so get in touch: