When I wrote about High Voltage Direct Current and Lithium-Ion Battery Storage I often came across terms and concepts related to the production and consumption of electricity that I had a vague idea of, but not an explicit understanding. I’ve been writing them down and researching what they are and why they arose. When I research an article and come across one of these concepts, I have a colloquial definition to refer to. So here is a list of some of these concepts that I’ll be adding to as I write more articles:
Demand Charge: On top of the energy charge which electricity customers pay for the total electricity consumed, some users with very high monthly energy usage also pay a demand charge. The charge is determined from the highest 15-minute average usage recorded by the demand meter in a month. This charge is used to cover a utilities’ fixed cost of load following and peaker generation plants. Utilities must be able to meet electricity demand during peak hours, but because demand is often below peak levels, large amounts of generating capacity sit idle for most of the day and produce no revenue. The demand charge pays for these plants so they can be operational when needed.
Upstream and Downstream: This refers to the point on the electricity supply chain where an activity occurs. Upstream refers to the production while downstream refers to the distribution and consumption. The farthest upstream activity is the actual generation of electricity and the farthest downstream activities are activities occurring behind the meter.
Behind the Meter: This refers to activity, most often renewable energy generation or battery storage, that is used on-site in a home, office-building or commercial facility. Operating behind the meter allows property owners to better manage their energy costs by reducing their demand charge and responding to daily price changes.
Transmission is the process of transporting electricity in bulk quantities from one point to another. This is often the transmission of electricity from a generator to a distribution system.
Distribution is the process of transporting electricity to its final use points such as homes and businesses.
ISO/RTO: Independent System Operators and Regional Transmission Operators developed out of a federal mandate to reduce conflicts of interest in providing electricity to Americans. They are independent operators of the electrical transmission system. This is important because if the same company owned the distribution system, transmission system and some generation facilities it would be able to prioritize delivery of electricity generated at its own facilities. RTOs generally operate over a larger area than ISOs.
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Do you want to understand what something in the energy world is or why it arose? Contact me: hk@nyenergyweek.com
Hudson Kuras is the New York Energy Week 2017 Fellow. He graduated from Columbia University in February 2017 with a Bachelor’s of Arts in Sustainable Development concentrating on energy and resources. He has worked as a Summer Analyst at Brown Brothers Harriman & Co. and as a non-profit Consultant with Columbia’s Earth Institute.
