List of terms and acronyms used in the methodology.
- ALF (Annual Load Factor)
- A measure used in TNUoS calculations representing the ratio of actual annual generation to the maximum possible generation. For batteries without three years of historical data, a generic ALF of 1.63% is used.
- aFRR (Automatic Frequency Restoration Reserve)
- aFRR follows FCR as a frequency response service. Providers must begin responding within 30 seconds and reach full activation within 5 minutes. Revenues come from two linked auctions: aFRR capacity and aFRR energy.
- BESS (Battery Energy Storage System)
- A system that stores electrical energy in batteries for later use. BESS assets can provide various services including energy arbitrage, frequency response, and grid balancing.
- BM (Balancing Mechanism)
- A tool used by the Electricity System Operator in Great Britain to balance electricity supply and demand in real-time. Generators and storage operators are instructed to increase or decrease output through bids (reduce output) and offers (increase output).
- CfD (Contract for Difference)
- A subsidy scheme for renewable generators in Great Britain. Generators receive a top-up payment when wholesale prices are below the strike price, and pay back when prices exceed it.
- DA/ID (Day-Ahead / Intraday)
- The two main wholesale electricity trading timeframes. Day-ahead markets trade electricity for delivery the following day, while intraday markets allow trading up until shortly before delivery.
- DNO (Distribution Network Operator)
- Companies responsible for operating the local electricity distribution networks that deliver power from the transmission system to homes and businesses.
- DUoS (Distribution Use of System)
- Charges paid by electricity users for the use of the distribution network. These vary by time of day and location.
- EAC (Enduring Auction Capability)
- The auction platform for procuring dynamic frequency response services in Great Britain. Launched to provide a more efficient market-based approach to frequency response procurement.
- ENTSO-E
- The European Network of Transmission System Operators for Electricity. Coordinates cross-border electricity transmission and publishes pan-European scenarios and data.
- FCR (Frequency Containment Reserves)
- Primary frequency response mechanism used in Europe. It pays for availability to respond to frequency deviations, not energy delivered. Providers must respond within seconds.
- FES (Future Energy Scenarios)
- Future Energy Scenarios from NESO (National Energy System Operator). We reference specific pathways from the annual FES publications for demand and capacity projections.
- GSP (Grid Supply Point)
- The point at which electricity is supplied from the transmission network to a distribution network. GSP groups define regions for TNUoS charging purposes.
- LMP (Locational Marginal Price)
- The price of electricity at a specific location on the grid, reflecting the cost of serving one additional unit of demand at that location including generation costs, congestion, and losses.
- NESO (National Energy System Operator)
- The operator responsible for balancing electricity supply and demand across Great Britain and managing the transmission system. Formerly known as National Grid ESO.
- NTC (Net Transfer Capacity)
- The maximum power that can be transferred between two areas, taking into account network constraints and security requirements.
- PRM (Planning Reserve Margin)
- A reliability standard defining how much generation capacity the system must have above expected peak demand to ensure security of supply.
- Renewable load factors
- The ratio of actual energy generated to the maximum possible generation based on nameplate capacity. A load factor of 25% means a generator produced 25% of its theoretical maximum output.
- REGO/GOO (Renewable Energy Guarantee of Origin / Guarantee of Origin)
- Certificates that prove electricity was generated from renewable sources. These can be traded separately from the underlying electricity.
- S-curve
- At the fleet level, the S-curve represents how the short-run marginal cost (SRMC) of generation rises as a larger share of a technology’s fleet is dispatched. Early output comes from the lowest-cost units, but as utilisation increases, progressively higher-cost units are required, creating a non-linear, “S-shaped” cost curve.
- SoC (State of Charge)
- The current energy level of a battery expressed as a percentage of its total capacity. A battery at 50% SoC has half of its energy capacity available.
- SRMC (Short-Run Marginal Cost)
- What it costs each unit to generate one additional MWh. Expressed in currency per MWh (e.g., €/MWh). Includes fuel costs, carbon costs, and variable O&M but not fixed costs.
- TNUoS (Transmission Network Use of System)
- Charges for using the high-voltage transmission network. For generators, these can be positive (a cost) or negative (a revenue) depending on location and grid connection type.
- TSO (Transmission System Operator)
- The entity responsible for transporting electricity on the high-voltage transmission network and maintaining system balance. Examples include NESO (GB), RTE (France), and 50Hertz (Germany).
- TYNDP (Ten-Year Network Development Plan)
- ENTSO-E’s and ENTSO-G’s scenarios within the context of the ongoing energy transition. We reference the Distributed Energy scenario from TYNDP 2024 for European demand and capacity projections. Learn more about TYNDP scenarios here.
- WACC (Weighted Average Cost of Capital)
- The average rate of return required by all of a company’s investors. Used in capacity expansion modelling to discount future cash flows. Our model uses 5.00% real (approximately 7.10% nominal).