Following the Targeted Charging Review, Ofgem have decided to replace the Triad system with a series of fixed ‘charging bands’ set across the UK. The reforms will be implemented over 2021 and 2022 and, according to Ofgem, it is expected to collectively save customers up to £300m per year.
The Triad system meant that energy consumers are charged for the use of the Transmission Network based on their average consumption over three peak half hour periods between November and February each year. The new payment system will divide non-domestic consumers into different bands with a single charge applied to all consumers within each band. The charging bands will be set based on either a consumer’s Agreed Capacity with the relevant Distribution Network or their net volume where no agreed capacity is in place.
Ofgem’s viewpoint is that replacing Triads with fixed charges will spread the cost of recovering residual charges more fairly among all energy users.
April 2021 – The Triad system will cease from Spring 2021. This means that the Winter period from November 2020 to February 2021 will be the last time in which consumers can avoid the Triad charges.
April 2022 – Reforms to Distribution Charges will be implemented, more details to be provided in the coming months.
Impact on large energy users
Currently non-domestic energy consumers, generally those consumers with half-hourly metering, have been able to take actions to avoid paying Transmission System charges by reducing their energy consumption during the Winter peak periods.
Under the new regulations, Triad avoidance will not be possible, as Ofgem believes that every consumer should contribute to the cost of building, maintaining and operating the Transmission Network.
However, Triad avoidance is only one of many activities that large energy users can take to generate savings and improve their bottom line.
Mark Davis, Director UK & Ireland at GridBeyond commented:
“As Ofgem’s decision on Transmission Charging for Behind-the-Meter customers is in favour of a flatter, year-round charge, large energy users should look to take other actions to recover the value.”
“Energy markets create a wide range of opportunities for the proactive consumers that can use their energy intensive assets, embedded generation, and storage to participate in financially rewarding energy services.”
“New intelligent energy technologies mean that large energy users are empowered to make the best return on their participation in energy services, regardless of the changes to the regulatory environment.”
“Balancing services, including frequency response and the recently reinstated Capacity Market, smart tariffs, trading, imbalance optimisation, and on-site asset optimisation and efficiencies are only a few of the services available for industrial and commercial energy consumers to recover the value of Triad avoidance. I think this reform will see businesses evaluate their energy strategy and start to take advantage of more of these services.”
Find out more:
We encourage all of our clients and partners to learn more about the Ofgem reform and the impact on businesses by contacting Martin Stevens, Head of Client Engagement, with any questions they might have via: firstname.lastname@example.org
Additional notes and resources:
What are Triads?
The term Triad refers to the three half-hour settlement periods with highest system demand between November and February, separated by at least ten clear days. National Grid use the Triad system to determine TNUoS charges for customers with half-hourly metering.