We know the industry can get jargon-heavy and default to using acronyms in an effort to simplify technical terms and names of industry bodies, so we’ve compiled a glossary of common industry terms to help as a quick reference.
If there are any terms you’d like to see added or further explained, please contact our team via the form below.
Glossary of Key Energy Sector Terms
The expert energy policy adviser to Australian Governments.
Australia’s independent energy markets and power systems operator provides critical planning, forecasting and power systems information, security advice and services to stakeholders.
The regulator of Australia’s wholesale electricity and gas markets. It’s part of the ACCC and enforces the rules established by the AEMC.
An electricity user’s average daily consumption (measured in kWhs)
Base load generators provide an almost constant supply of electricity to the grid, helping to balance out intermittent generation.
Part of an electricity user’s bill is capacity-based, which means it's based on how much of the network’s capacity has been used by the customer during the billing period. It is typically based on their maximum demand or coincident maximum demand during that period.
The Capacity Market is a framework governing the production and sale of electricity in Western Australia. Within this framework, generators receive a payment for providing capacity to the grid when needed, even if it isn’t used.
The carbon emitted per unit of energy used - often expressed in g/kWh.
A process or operation in which the carbon emissions associated with its actions are reduced or offset to zero.
Actions taken to mitigate the impacts of carbon released by a process or operation, for example planting trees to absorb equivalent levels of CO2 to those produced.
This is the amount of electricity used by a customer during the time when the local electricity supply system’s maximum demand interval.
If your business operates within a Contestable Market, you can choose your energy retailer. Most businesses in NSW, VIC, TAS, SA and Southern QLD can select their own electricity retailer.
A Contract for Difference is a financial hedging arrangement between a generator and a customer. They agree a ‘strike price’ - a guaranteed rate of revenue for the project - at the beginning of the contract. If the generator achieves wholesale (spot) market prices above the strike price within a specified period of time, they pay any additional revenue to the customer. If their revenue falls below the strike price, the customer pays the generator the shortfall in order to meet the agreed strike price.
When electricity users sign a network connection agreement or energy supply contract, they will agree a maximum level of demand, which sets out the maximum amount of energy they can take from the supply point at any given time. If they exceed this level, then they may incur financial penalties and a higher demand tariff.
When customers reduce their energy consumption in response to fluctuations in supply and demand on the power grid, in order to maintain a balance between energy supply and demand, it’s known as demand response. DR participants shift their energy use to a different time of the day, switch to another type of generation (like solar panels) or simply reduce their consumption in order to reduce the stress on the grid during peak demand periods, or increase their energy usage when demand is low and supply is high.
Some electricity users choose to time their electricity consumption and the volume of electricity they use in order to reduce demand during peak demand periods, which can reduce their energy prices and the expenditure needed for poles and wires (by reducing the maximum demand on the grid).
When electricity generators, including back-up generation, co-generation units and renewable energy assets, are connected to the distribution network close to load/centres of demand they are known as distributed or embedded generation.
Within the contestable NEM, large energy users can choose their registered metering provider under our Power of Choice legislation. They make a Direct Metering Agreement with a metering provider separate to their supply contract.
The dispatch price is the price that energy generators are paid for supplying the grid with energy capacity within a set five minute period.
An Electricity Futures Contract is a standardised, exchange-based Contract for Difference that sets out the volume and price of electricity that will be traded at a certain point in the future.
In the National Electricity Market (NEM), the market framework governing the production and sale of electricity is known as an Energy Only Market. Unlike a Capacity Market, in which generators are paid for simply having capacity available, in an Energy Only Market, generators are only paid for producing power.
This subsidy scheme provides owners of small-scale solar PV and/or wind power systems with payment for providing excess electricity generated by their asset to the grid. The asset must be installed on a house or small business and connected to the grid within the National Energy Market.
Companies that own and operate major power generation facilities and are also involved in the electricity retail market.
An interconnected electricity network that delivers power from generators to consumers.
Within the National Electricity Market, generators are required to sell the energy they produce under an electricity trading arrangement known as the Gross Pool Market.
Generators are classed as intermittent if the timing of their supply into the grid cannot be controlled - if the sun doesn’t shine, for example, solar panels won’t produce electricity. Other examples of intermittent generators include wind turbines, wave and tidal generation assets.
Under the Large-scale Renewable Energy Target (LRET) scheme, accredited renewable energy power stations are provided with one Large-scale Generation Certificate (LGC) for each megawatt hour of eligible renewable energy they generate above their baseline. These certificates can be sold to other parties, such as electricity retailers, which are required to surrender a certain number of LGCs to the Clean Energy Regulator annually.
The LRET is a government scheme that requires wholesale purchasers of electricity (mostly energy retailers) to source a set proportion of their electricity from large-scale renewable energy generators every year. The aim of the scheme is to increase the proportion of energy produced by large-scale renewable energy technologies, such as wind and solar farms and hydroelectric power stations.
A load profile is a chart that shows how an energy user’s electricity demand fluctuates throughout a typical day and/or year. Electricity retailers consider a user’s load profile when determining charges - the more unpredictable a user’s load profile is, the more they will charge for a fixed rate contract.
When an energy user shifts their consumption from one time period to another, usually as a form of demand response, it is known as load shifting.
As electricity is distributed along our electricity infrastructure, some energy is lost, which has a financial impact on retailers as it means they have less energy to deliver than they originally bought on the wholesale market. Electricity retailers pass the cost of this lost energy onto customers through loss factor charges on their bills.
The highest level of demand within a set time period. Also referred to as Peak Demand or Peak Load.
The NEM is a wholesale market through which Australian generators and retailers trade electricity. It interconnects the six eastern and southern states and territories and provides around 80% of all electricity consumption in Australia.
The Department of Industry, Science, Energy and Resources has designed the National Greenhouse Accounts (NGA) Factors to help companies and individuals to estimate their greenhouse gas emissions. They estimate default emission factors using the Australian Greenhouse Emissions Information System and Australia’s National Greenhouse Accounts, which ensures consistency in emissions measurement at a company and a national level.
The NGER Scheme is a single national framework for reporting and disseminating company information about greenhouse gas emissions, energy production and energy consumption.
A unique 10 or 11 digit number used to identify every electricity network connection point in Australia.
NSPs are the companies that own, operate and maintain the electricity network infrastructure, including the transmission and distribution networks.
NSPs pass the cost of supplying, maintaining and improving the network infrastructure on to energy retailers. Retailers then pass these charges through to electricity customers in the form of a bundled or unbundled Network Tariff as part of their electricity contract. Network infrastructure charges are fixed and non-negotiable, and they are updated annually within the NEM. They typically account for around 50% of a user’s electricity bill.
A business, such as SmartestEnergy, which purchases power from independent generation projects which it does not own.
If an organisation or country reaches net zero, they have achieved a balance between the amount of greenhouse gas they produce and the amount that they have removed from the atmosphere.
If an electricity user can reduce their power consumption during peak periods, they can participate in a type of demand side response known as peak shaving.
If an energy user’s load profile is particularly unpredictable, it is considered ‘peaky’.
Since 2017, when Power of Choice legislation came into force, large energy users have been able to choose to have a Direct Metering Agreement (DMA) in place which enables them to choose their metering services provider.
A corporate Power Purchase Agreement (PPA) is a long-term contract under which a business agrees to purchase electricity from an energy generator. They agree a set ‘strike price’ for your PPA at the start of their contract, and this remains fixed for the duration of the contract.
These include any emissions that an organisation cannot remove entirely, either because it is not possible or too expensive Residual emissions will require offsetting to achieve net-zero.
Decarbonisation targets which aim to achieve the Paris Agreement goal of limiting global warming to less than 1.5 degrees Celsius.
Under the international Greenhouse Gas Protocol, greenhouse gas emissions are classified into three categories: Scope 1, Scope 2 and Scope 3. Scope 1 emissions are direct GHG emissions that occur from sources that are controlled or owned by an organisation; Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity, steam, heat or cooling; Scope 3 emissions are all other indirect emissions that occur within a company’s value chain.
Under the SRES, when an eligible solar PV system is installed, the owner is provided with a number of Small-Scale Technology Certificates (STCs) equivalent to the expected system output between the time of installation and the end of the RET scheme in 2030. Wholesale purchasers of electricity are required to purchase a set number of STCs annually, which means asset owners can sell their certificates in order to gain financial benefits.
‘Smart’ meters measure an organisation or household’s electricity consumption at regular intervals and can be read by energy retailers remotely.
The South West Interconnected System is Western Australia’s primary electricity grid, supplying power to the majority of the South West region from Albany in the South, Kalgoorlie in the East and Kalbarri in the North.
In the spot market, electricity is traded for immediate physical delivery, compared to the future market, in which delivery is set for a later date and typically doesn’t involve immediate physical delivery.
This is the wholesale energy market clearing price for a specific trading period, which is based on the bids that generators or gas traders have submitted nominating the volume of energy they will supply for a given price, ranked in order from lowest to highest price.
Electricity users on Time of Use Tariffs pay variable electricity rates depending on the time that they use energy, with costs increasing during peak demand periods and falling during lower demand periods.
The equivalent of 1 tonne of carbon dioxide. This is a standard unit for measuring national and international greenhouse gas emissions.
A VPP is a network of decentralised, medium-scale generators like wind and solar farms and Combined Heat and Power (CHP) units, flexible energy users and battery storage systems. They are connected and dispatched by a central control, but they are owned and operated independently.
Western Australia’s electricity market that includes the South West Interconnected System and the North West Interconnected System.
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