Energy Glossary

Active solar – As an energy source, energy from the sun collected and stored using mechanical pumps or fans to circulate heat-laden fluids or air between solar collectors and a building.

Aggregator –  Any marketer, broker, public agency, city, county, or special district that combines the loads of multiple end-use customers in negotiating the purchase of electricity, the transmission of electricity, and other related services for these customers.

Ancillary services –   Services that ensure reliability and support the transmission of electricity from generation sites to customer loads. Such services may include load regulation, spinning reserve, non-spinning reserve, replacement reserve, and voltage support.

Balancing authority (electric) –   The responsible entity that integrates resource plans ahead of time, maintains load-interchange-generation balance within a Balancing Authority Area, and supports Interconnection frequency in real time

Basis or Basis Differential – a term commonly used to refer to the difference in value of a unit of electricity or natural gas delivered at one location as compared to the value of the same unit of electricity or natural gas delivered at another location; for example, if the value of a unit of natual gas delivered to the Chicago Citygate is $3.00 / MMBtu and the value of a unit of natural gas delivered to Henry Hub is $2.75 / MMBtu, the Chicago Citygate basis is $0.25 / MMBtu.

British Thermal Unit (BTU) – defined as the amount of heat required to raise the temperature of 1 lb of liquid water by 1 °F at a constant pressure of one atmosphere.  MMBtu represents one million BTU.

Bundled utility service (electric) –   A means of operation whereby energy, transmission, and distribution services, as well as ancillary and retail services, are provided by one entity.

Capacity (kW) – how much energy the system must be able to generate to meet the instantaneous load; also a measurement of instantaneous electricity load.

Carbon footprint – the total set of greenhouse gas (GHG) emissions caused by an organization, event, product, or person.

Carbon offsetting – reducing a carbon footprint.

Citygate –  A point or measuring station at which a distributing gas utility receives gas from a natural gas pipeline company or transmission system.

Cooling degree days (CDD) – measure how much (in degrees) and for how long (in days) outside temperature was higher than a specific base temperature.

Congestion –   A condition that occurs when insufficient transfer capacity is available to implement all of the preferred schedules for electricity transmission simultaneously.

Consumption vs DemandkWh vs kW – Consumption is the total amount of energy used during a period of time (kWh); demand is the instantaneous rate of that consumption usually measured as an average over 15 or 30 min intervals. Automobile analogy to understand how demand and consumption relate –  the car’s speedometer is like the demand and the odometer is like the consumption.

Degree days – Used in the energy industry as a representation of outside temperatures and how it relates to energy consumption.

Dekatherm – A common measurement unit for natural gas based on its energy content; equal to 10 therms or 1 MMBtu

Demand response programs –   Demand response programs are incentive-based programs that encourage electric power customers to temporarily reduce their demand for power at certain times in exchange for a reduction in their electricity bills. Some demand response programs allow electric power system operators to directly reduce load, while in others, customers retain control. Customer-controlled reductions in demand may involve actions such as curtailing load, operating onsite generation, or shifting electricity use to another time period. Demand response programs are one type of demand-side management, which also covers broad, less immediate programs such as the promotion of energy-efficient equipment in residential and commercial sectors.

Demand-side management (DSM) –   A utility action that reduces or curtails end-use equipment or processes. DSM is often used in order to reduce customer load during peak demand and/or in times of supply constraint. DSM includes programs that are focused, deep, and immediate such as the brief curtailment of energy-intensive processes used by a utility’s most demanding industrial customers, and programs that are broad, shallow, and less immediate such as the promotion of energy-efficient equipment in residential and commercial sectors.

Deregulation –   The elimination of some or all regulations from a previously regulated industry or sector of an industry; in regards to the electricity and natural gas industries, often refers to the introduction of supplier competition and consumer choice.

Direct access –  The ability of a retail customer to purchase electricity or other energy sources directly from a supplier other than their regulated utility.

Distribution provider (electric) –  Provides and operates the wires between the transmission system and the end-use customer. For those end-use customers who are served at transmission voltages, the Transmission Owner also serves as the Distribution Provider. Thus, the Distribution Provider is not defined by a specific voltage, but rather as performing the Distribution function at any voltage

Electricity broker –  An entity that arranges the sale and purchase of electric energy, the transmission of electricity, and/or other related services between buyers and sellers but does not take title to any of the power sold.

Energy charge –  That portion of the charge for electric service based upon the electric energy (kWh) consumed or billed.

Energy efficiency, Electricity –  Refers to programs that are aimed at reducing the energy used by specific end-use devices and systems, typically without affecting the services provided. These programs reduce overall electricity consumption (reported in megawatthours), often without explicit consideration for the timing of program-induced savings. Such savings are generally achieved by substituting technologically more advanced equipment to produce the same level of end-use services (e.g. lighting, heating, motor drive) with less electricity. Examples include high-efficiency appliances, efficient lighting programs, high-efficiency heating, ventilating and air conditioning (HVAC) systems or control modifications, efficient building design, advanced electric motor drives, and heat recovery systems.

Energy service provider –  An energy entity that provides service to a retail or end-use customer.

Firm power – Power or power-producing capacity, intended to be available at all times during the period covered by a guaranteed commitment to deliver, even under adverse conditions.

Futures market – A trade center for quoting prices on contracts for the delivery of a specified quantity of a commodity at a specified time and place in the future.

Generation – The process of producing electric energy by transforming other forms of energy; also, the amount of electric energy produced, expressed in kilowatthours.

Generator capacity – The maximum output, commonly expressed in megawatts (MW), that generating equipment can supply to system load, adjusted for ambient conditions.

Grid – The layout of an electrical distribution system.

Heat Rate – Used to calculate how efficiently a generator uses heat energy. It is expressed as the number of BTUs of heat required to produce a kilowatt-hour of energy; Power Price / Natural Gas Price = Implied or Market Heat Rate.

Heating degree days (HDD) – measure of how much (in degrees) and for how long (in days) outside temperature was lower than a specific base temperature.

Hedging – a position established in one market in an attempt to offset exposure to price changes or fluctuations with the goal to minimize risk.

Independent system operator (ISO) – An independent, federally regulated entity established to coordinate regional transmission in a non-discriminatory manner and ensure the safety and reliability of the electric system.

Interruptible load – This Demand-Side Management category represents the consumer load that, in accordance with contractual arrangements, can be interrupted at the time of annual peak load by the action of the consumer at the direct request of the system operator. This type of control usually involves large-volume commercial and industrial consumers. Interruptible Load does not include Direct Load Control.

kW, kWh – 1 kilo-watt or 1 kilo-watt hour of electricity; equal to 1,000 watts.

Load Factor – average consumption divided by the peak power over a period of time.

Locational Marginal Price (LMP) – the price of electricity at a particular point on the electrical grid; a term commonly used to refer to real time or day ahead electricity prices.

Mcf – A common measurement unit of natural gas based on its volume; 1 Mcf is roughly equal to 1.03 Dth and 1.03 MMbtu, though this conversion varies depending on the energy content of delivered natural gas

MMBtu – A common measurement unit of natural gas based on its energy content, equal to 1,000,000 Btu

Open access (electric) – Federal Energy Regulatory Commission Order No. 888 requires public utilities to provide non-discriminatory transmission service over their transmission facilities to third parties to move bulk power from one point to another on a nondiscriminatory basis for a cost-based fee. Order 890 expanded Open Access to cover the methodology for calculating available transmission transfer capability; improvements that opened a coordinated transmission planning processes; standardization of energy and generation imbalance charges; and other reforms regarding the designation and undesignation of transmission network resources.

Photovoltaic cell (PVC) –   An electronic device consisting of layers of semiconductor materials fabricated to form a junction (adjacent layers of materials with different electronic characteristics) and electrical contacts and being capable of converting incident light directly into electricity (direct current).

Pipeline (natural gas) –   A continuous pipe conduit, complete with such equipment as valves, compressor stations, communications systems, and meters for transporting natural and/or supplemental gas from one point to another, usually from a point in or beyond the producing field or processing plant to another pipeline or to points of utilization. Also refers to a company operating such facilities.

Power Purchase Agreement (PPA) – an agreement between the owner of an electricity generation facility and a buyer of electricity that sets forth the commercial terms for the purchase and sale of electricity from a generation facility.

RECs – Renewable Energy Credits – are tradable, non-tangible energy commodities in the U.S. that represent proof that 1 MWh of electricity was generated from an eligible renewable energy resource.

Renewable energy resources –   Energy resources that are naturally replenishing but flow-limited. They are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time. Renewable energy resources include biomass, hydro, geothermal, solar, wind, ocean thermal, wave action, and tidal action.

Shale Gas – Natural gas produced from wells that are open to shale formations. Shale is a fine-grained, sedimentary rock composed of mud from flakes of clay minerals and tiny fragments (silt-sized particles) of other materials. The shale acts as both the source and the reservoir for the natural gas

Solar Power Purchase Agreement – A power purchase agreement (PPA) is a financial agreement where a developer arranges for the design, permitting, financing and installation of a solar energy system at little to no cost up front, and an agreement on the part of the customer to purchase the energy for a per unit price.

Stranded costs –Costs incurred by a utility which may not be recoverable under market-based retail competition. Examples include undepreciated generating facilities, deferred costs, and long-term contract costs.

Tariff – For electric and natural gas utilities, a tariff is the collection of rules and rates that defines how and at what cost a utility provides service to its customers; a common term used to refer to the rate structure a customer is served under.

Therm – A common measurement unit of natural gas based on its energy content; equal to one hundred thousand (100,000) Btu

Virtual (or Financial) Power Purchase Agreement (VPPA) – Unlike a physical PPA, a virtual PPA is a financial contract rather than a contract for power. The offtaker does not receive, or take legal title to, the electricity and in this way, it is a “virtual” power purchase agreement.

Working gas – The quantity of natural gas in the reservoir that is in addition to the cushion or base gas. It may or may not be completely withdrawn during any particular withdrawal season. Conditions permitting, the total working capacity could be used more than once during any season. Volumes of working gas are reported in thousand cubic feet at standard temperature and pressure.

Source for some definitions –