Professional energy glossary
Energy terminology, connected to the decisions it affects.
Definitions are useful only when their boundaries are clear. Each term includes an example and links back to the reviewed learning modules that provide the wider context and sources.
- Active power
The component of AC electrical power that performs net work or transfers usable energy, measured in watts.
Example: A 10 MW motor load draws active power to produce mechanical output.
- Availability
The extent to which equipment is capable of operating when required, independent of whether it is actually dispatched.
Example: A generator can be technically available while producing zero because market prices do not justify dispatch.
- Balancing market
The arrangements used close to real time to activate resources and settle deviations between scheduled and metered positions.
Example: A system operator may activate upward balancing energy after an unexpected generator outage.
- Baseload
The relatively steady minimum level of system demand, and by extension the operating role historically served by units running for many hours.
Example: Baseload is an operating and demand concept, not a permanent physical category of power plant.
- Battery duration
A simplified measure of how long a battery can discharge at rated power, calculated as usable MWh divided by MW.
Example: A 200 MWh battery discharging at 50 MW has an idealized four-hour duration.
- Bid
An instruction expressing willingness to buy electricity or change a position at stated quantities and prices under specified market rules.
Example: Terminology differs by market, so bid and offer direction must always be checked against the applicable rules.
- Capacity factor
Actual electrical energy output divided by rated power multiplied by the time period.
Example: A 100 MW plant producing 262,800 MWh in a year has a 30% capacity factor in a non-leap year.
- Capture price
The generation-weighted average market price received by a technology or asset for the hours in which it produces.
Example: A solar plant may capture less than the simple annual average price if many solar plants produce during the same low-price hours.
- Congestion
A condition in which desired power transfers cannot all be accommodated within network and security limits.
Example: National generation may be sufficient while a local line or transformer prevents additional export from one area.
- Contract for difference
A financial settlement that pays the difference between an agreed strike price and a defined reference price for an agreed volume and period.
Example: The settlement depends on the contract definition and does not automatically remove volume, profile or basis risk.
- Curtailment
A deliberate reduction of available generation or export, commonly because of network, security or market conditions.
Example: A wind plant may be available and windy but instructed to reduce output because the local network is constrained.
- Day-ahead market
A market that schedules electricity for delivery on the following day through defined time intervals and clearing rules.
Example: Day-ahead schedules are forecasts and commercial positions, not guarantees of actual real-time production.
- Dispatchable generation
Generation whose output can be controlled within its technical, fuel, environmental and availability constraints.
Example: Dispatchable does not mean instant, unlimited or permanently online.
- Distribution system operator
The entity responsible for operating, maintaining and developing a distribution network within its legal and regulatory duties.
Example: A DSO is not automatically the customer’s electricity supplier.
- Efficiency
Useful energy output divided by energy input for a defined process and boundary.
Example: A plant exporting 50 MWh from 100 MWh of fuel energy has 50% net electrical efficiency under that boundary.
- Frequency
The rate of AC electrical cycles, used as a system-wide real-time indicator of active-power balance in a synchronous area.
Example: A frequency decline generally indicates that withdrawals exceed injections at that moment.
- Grid connection
The technical, contractual and regulatory process and infrastructure through which an asset connects to an electricity network.
Example: A connection offer may grant capacity subject to reinforcement, curtailment or operating conditions.
- Grid-forming inverter
An inverter controlled to establish or support a voltage waveform rather than only follow an existing grid waveform.
Example: Capability depends on control design, current limits, energy availability and verified grid-code performance.
- Imbalance
The difference between a participant’s contracted or scheduled position and the metered position under the applicable settlement rules.
Example: A wind producer can be commercially short when actual output falls below its nominated position.
- Intraday market
A market allowing positions to be adjusted after day-ahead clearing and closer to physical delivery.
Example: Updated weather forecasts may lead a renewable producer to trade intraday and reduce expected imbalance.
- Inverter
A power-electronic device that converts DC electricity into controlled AC electricity and can provide defined protection and grid-support functions.
Example: Solar PV and batteries commonly connect to an AC grid through inverters.
- Levelized cost of electricity
A discounted lifetime cost metric divided by discounted lifetime electrical output under stated assumptions.
Example: LCOE is useful for defined comparisons but does not by itself measure captured price, flexibility or project value.
- Marginal operating cost
The additional operating cost associated with producing one more unit of electrical energy under stated conditions.
Example: Fuel, carbon and variable operating costs can make a gas unit’s marginal cost much higher than that of wind or solar.
- Merit order
A simplified ordering of available generation offers from lower to higher short-run cost or offer price.
Example: The marginal accepted unit can influence the clearing price in an energy-only uniform-price market.
- Power purchase agreement
A contract governing the sale and purchase of electricity and related attributes under defined price, volume, delivery and risk terms.
Example: A pay-as-produced PPA does not automatically provide a buyer with firm hourly supply.
- Reactive power
The component of AC power associated with electric and magnetic fields, measured in vars and important for voltage and equipment loading.
Example: Reactive-power capability can support voltage but is limited by equipment ratings and operating conditions.
- Redispatch
A change in generation, storage or demand instructions used to relieve network constraints or maintain security after market scheduling.
Example: One generator may be reduced and another increased because the original commercial schedule cannot be transported securely.
- Revenue stacking
Combining multiple compatible revenue streams from one asset while respecting technical, contractual and market constraints.
Example: A battery may trade energy and provide reserves, but it cannot promise the same MW and state of charge incompatibly to several services.
- Synchronous generator
A rotating electrical machine whose magnetic field speed is synchronized with system frequency when directly connected.
Example: Large steam, gas and hydro units have traditionally used synchronous generators.
- Transmission system operator
The entity responsible for secure operation and development of a transmission system within the applicable legal framework.
Example: A TSO operates the high-voltage system and balances it; it is not the ordinary retail seller to end customers.
- Voltage
Electrical potential difference between two points, measured in volts.
Example: Transformers raise voltage for efficient bulk transfer and lower it for distribution and use.
- Weighted average cost of capital
A blended required return reflecting the relative shares and costs of debt and equity under stated assumptions.
Example: Changing risk allocation or financing conditions can alter WACC and therefore project valuation.