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.
Glossary of Key Energy Sector Terms
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 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.
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.
The dispatch price is the price that energy generators are paid for supplying the grid with energy capacity within a set five-minute period.
Operates electric distribution system to preserve reliability. All services provided under state commission approved rates.
An Energy Supply Company (ESCO) is any company that provides retail electric or gas supply.
The Federal Energy Regulatory Commission (FERC) is the United States federal agency that regulates the transmission and wholesale sale of electricity and natural gas in interstate commerce and regulates the transportation of oil by pipeline in interstate commerce.
An interconnected electricity network that delivers power from generators to consumers.
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.
The ISO operates the electric transmission system to preserve reliability and manages a wholesale electricity marketplace for sellers and buyers on a non-discriminatory basis. All services are provided under Federal Energy Regulatory Commission (FERC) approved tariffs.
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.
NSPs are the companies that own, operate and maintain the electricity network infrastructure, including the transmission and distribution networks.
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.
The vision for the Electric Reliability Organization Enterprise, which is comprised of NERC and the six Regional Entities, is a highly reliable and secure North American bulk power system. The NERC’s mission is to assure the effective and efficient reduction of risks to the reliability and security of the grid.
A business, such as SmartestEnergy, which purchases power from independent generation projects which it does not own.
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’.
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.
‘Smart’ meters measure an organisation or household’s electricity consumption at regular intervals and can be read by energy retailers remotely.
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.