Energy Glossary | Comprehensive Definitions and Terminology

The proactive adjustment of electricity consumption by consumers to align with system conditions, such as supply availability or price signals. This can involve load reduction or load shifting.

Also known as ‘Real Power’ or simply ‘Power’. Active power is the rate of producing, transfer or using electrical energy. Measured in watts and often-expressed in kW or MW.

An agreed amount of electrical load for a property, as stated in the property’s Connection Agreement with the local Distribution Network Operator (DNO). Also known as Available Supply Capacity (ASC).

An entity that brings together multiple electricity consumers and coordinates their participation in demand response programs. Aggregators pool the electricity demand reduction capabilities of individual consumers and offer them as a single resource to grid operators or utilities.

Where a customer is interrupted or tripped off within the parameters and provisions of their contract.

Electricity that changes direction periodically. The period is measured in Cycles per Second (Hertz, Hz).

Support services required to maintain the stability and reliability of the power grid. Demand response can be considered as an ancillary service since it helps balance electricity supply and demand in real-time.

It is the sum of the annual consumption of all meters on a site. This comes from National Grid and is based on historical usage from previous years. Measured in kWh (electricity) or Therms (gas).

AMR is the term given to a system that provides automatic meter readings remotely. It uses telephone technology and holds the ability to transfer data into a billing system.

Availability (kVA) or Agreed Capacity refers to the limit of capacity for a site. E.g. if a site has an Availability of 150 kVA then maximum demand should not exceed that figure at any time. It is set and charged by the local Distribution Network Operator (DNO), according to the kVA of a premise. This fee covers investment and maintenance of the electricity network and can also be called the Capacity Charge. Customers pay a fee (per unit) according to the agreed capacity for that site. In theory, maximum demand should not exceed the agreed capacity at any time.

Auxiliary power generation capacity that can be deployed when there is a shortage of electricity supply or during emergencies. Backup generation systems can include generators or storage systems that provide power during demand response events or grid disruptions.

An organisation responsible for maintaining the balance between electricity supply and demand within a specified area or region. Balancing authorities ensure grid reliability and may use demand response resources to help manage imbalances between supply and demand.

The mechanism used by the National Grid Company to balance the supply and demand of electricity.

A reference point or historical measurement used as a basis for comparison when evaluating the effectiveness of demand response. Baseline values represent the expected electricity consumption of a consumer or group of consumers in the absence of any demand response actions.

Base load is the level below which electricity demand never drops, i.e. a site with a high maximum demand of 750kVa whose demand never drops below 250kVa would have a base load of 250kVa.

The price at which a demand response participant offers their load reduction capability in response to a demand response event. Bid prices reflect the cost or value associated with reducing electricity consumption and are used to determine the compensation paid to participants.

Trading whereby two parties (for example a generator and a supplier) enter into a contract to deliver electricity at an agreed time in the future.

The Balancing and Settlement Code contains the rules and governance arrangements for electricity balancing and settlement in Great Britain. The code covers the metering of the physical production and demand for electricity from generators, suppliers and interconnectors in relation to their contracted positions. And it also covers the calculating and settling of any imbalances when delivery or offtake doesn’t match those positions.

The BSUoS charge recovers the cost of day-to-day operation of the transmission system.

A scheme, e.g. covering CO2 or green house gas emissions, in which the quantity of pollutant is fixed and participants trade emission allowances to meet the cap at lowest cost.

A set charge by the local Distribution Network Operator (DNO) for investment and maintenance of the electricity network, based on the Agreed Capacity of a property. This can also be called the Availability Charge.

A mechanism such as a capacity obligation that requires electricity industry participants to provide a defined level of generating capacity.

A capacity market creates a financial incentive for electricity providers to invest in and maintain sufficient capacity to reliably meet future electricity demand. By offering payments for capacity, the market aims to ensure a reliable supply of electricity, especially during peak demand periods or in situations where unexpected events affect power generation. Typically, capacity markets work through a competitive auction process. The system operator or a regulatory authority determines the forecasted demand and sets a target level of capacity required to meet that demand reliably. Electricity providers then bid to offer their capacity at a certain price, and the providers with the lowest bids are selected until the target capacity is reached.

A credit or permit arising from a greenhouse gas emissions reduction scheme, such as emissions trading, JI or CDM. Emissions are controlled by setting a cap on total emissions and allowing the market sector(s) to reach an economically balanced response via trading of emissions allowances.

A measure of the amount of carbon dioxide or CO2 emitted through the combustion of fossil fuels; can be measured on a personal or national level, or according to a specific activity, such as taking a flight to go on holiday.

The amount of CO2 emitted for a given volume of electricity. It allows the emissions from different amounts of electricity to be compared. For example, a coal power station produces around 890 grams of CO2 for every kilowatt hour of electricity, whereas a gas-fired power station produces around 370 grams of CO2 for each kilowatt hour of electricity.

A carbon offset negates the overall amount of carbon released into the atmosphere by avoiding the release or removing it elsewhere – e.g. through a renewable energy or energy conservation project. Voluntary carbon offsetting schemes can help people reduce their carbon footprint, but should only be used as a last resort. It is also important that a credible scheme is used.

A tax levied on fossil fuel usage usually based on the carbon content – generally designed to curb use rather than just raise revenue.

The trading of personal, corporate or national credits to maintain and gradually reduce carbon emissions. Companies, nations or individuals who beat the targets can sell the balance as credits to those that exceed their limits.

An agreement between the government and a business user, whereby a reduced rate of Climate Change Levy is payable in return for a commitment by the user to achieve certain pre-determined targets for energy usage or carbon emissions.

CCL is a government-imposed tax to encourage reduction in gas emissions and greater efficiency of energy used for business or non-domestic purposes. CCL is chargeable only on units/kWh used and not on any other component of the bill, e.g. standing charge.  The rate of CCL is index-linked and therefore likely to increase on 1 April each year.

A fee levied by National Grid on the quantity of gas transported through the system.

A document which states the Agreed Capacity for a property with the local Distribution Network Operator (DNO).

Contracts for Difference (CfDs) is intended to provide long-term revenue stabilisation to low-carbon Generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers.

These are the costs that are incurred as an electricity supplier. These include the costs of maintaining IT systems, paying staff to manage customer accounts.

A pricing mechanism where electricity rates are significantly higher during periods of high demand or system stress, typically referred to as “critical peak” periods. CPP incentivizes consumers to reduce their electricity usage during these peak periods through demand response actions.

The intentional reduction or temporary interruption of electricity consumption by demand response participants in response to grid conditions, system emergencies, or price signals. Curtailment helps balance electricity supply and demand and can be achieved through load reduction or load shifting.

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