Glossary of Energy Terms

Aggregators - Can be either a web site or a group that aggregates customers together in order to approach a supplier with a larger volume of business. Aggregators are licensed by the PSC and share many similarities with brokers. 

Alternative Compliance Payment (ACP) – The ACP is the price that LSE’s have to pay if they cannot meet the state’s RPS. For every mWh short in Tier 1, for example, an LSE has to pay $40. The ACP for solar is much higher, and for Tier 2 it is much lower.

Alternative Electricity Suppliers - Electricity suppliers that purchase electricity on the wholesale market and sell it at retail to customers at rates that are not subject to government approval. They do not typically own any generation.
Animal Manure – Animal manure is a category within the larger biomass category, which refers to using animal waste (often chicken waste in Maryland) to create energy either through incineration or anaerobic digestion.  Burning animal waste does produce some emissions, including greenhouse gases and other air pollutants.
Biofuels –  Biofuels are liquid fuels made from biomass. Some common sources for biofuels include palm oil, canola oil, soybean oil, waste cooking oil, grease, and food wastes.

Biogas - Biogas is a gas composed mainly of methane and CO2 that forms as a result of biological processes in sewage treatment plants, waste landfills, and livestock manure management systems.

Biomass - Biomass is plant and animal matter, including energy crops, wood, grasses, algae, vegetable oils, and agricultural and municipal wastes, landfill gas and biogas, ethanol and biodiesel. Wood biomass includes wood chips from forestry operations, residues from lumber, pulp/paper, and furniture mills, and fuel wood for space heating.

Black Liquor – Black liquor is a by-product substance produced by the paper pulping process. It can be combusted to produce electricity.

BPI  - The Building Performance Institute, which sets standards and conducts training for residential energy efficiency work.

Brokers - Licensed by the PSC, brokers don’t take title to energy, but match buyers with sellers. They are often the primary point of contact for commercial entities. Brokers do not focus on residential markets at this time, though there are some web sites where residents can compare offers of various suppliers.
BTU -  British Thermal Unit is the amount of energy needed to cool or heat one pound of water by one degree Fahrenheit. It is typically used in a measurement of power in the heating and air conditioning space. For example, solar thermal systems are measured by how many BTUs they produce.
Budget Billing - Most utilities and suppliers offer budget billing, which allows customers to pay a fixed amount each month. Budget billing averages bills out over 12 months, so each monthly bill will be the same amount until the total bill is paid. The company may adjust the bill at certain times throughout the year, up or down, depending on 
the customer’s use.

Capacity Charge - The capacity charge, sometimes called “demand charge” or “system use charge,” is assessed on the maximum or peak amount of electricity used. Often, the charge is based on the maximum amount of electricity used at any time in the previous 12 months. Ratepayers that reduce their peak demand can see their Capacity Charge lowered in future years.

Capacity Factor – Typically applied to renewable generation. The capacity factor is the percentage of time that a renewable energy generator could possibly hit maximum generation. For example, a wind turbine with a 30% capacity factor would only be able to hit maximum capacity about a third of the time.

Carbon Neutral-A transparent process of calculating emissions, reducing those emissions and offsetting residual emissions such that net carbon emissions equal zero.

Carbon Offset - Emission savings or storage that can be considered to cancel out emissions that would otherwise have occurred. For example, electricity produced from burning landfill gas is considered to replace electricity from the grid, leading to a carbon offset because landfill gas production and combustion results in lower carbon emissions than grid electricity production from fossil fuels.

CO2 or “Carbon” – CO2 is a naturally and man-made gas, which is one of the most common greenhouse gases that scientists report are causing global warming. 

Commercial Energy Customer – One of three principal classes of electricity customers. Commercial customers consist of non-manufacturing business establishments, including retail stores, hotels, restaurants, wholesale businesses and educational institutions, among others.

Compressed Natural Gas (CNG) – CNG is made by compressing natural gas to a fraction of its normal volume in order to be used as a fuel for vehicles as a replacement for gasoline.

Concentrated Solar Thermal – Concentrated Solar Thermal is utility scale electricity generation via focusing fields of rotating mirrors called Heliostats at one or multiple central core towers. The resulting intense heat is used to create steam which runs turbines to generate electricity.

Curtailment Service Provider - A Curtailment Service Provider is an entity that helps energy consumers reduce their energy usage at specified times, typically as part of a demand reduction program.

Demand Reduction (DR) - Demand reduction is when an energy consumer reduces their peak demand and energy use at a specified time. PJM incentivizes DR as a cheaper option than peak power plants when the grid is over utilized. The typical DR program pays a consumer to reduce their peak demand.

Distributed Generation (DG) - Any small scale electric generation that is located at or near the point of end use. It may be interconnected with a local utility company’s distribution system or not. It may be owned and operated by a customer, a utility, or a non-utility company.

Distribution System - The network of wires and equipment (electricity) or pipes (natural gas) that carries energy from the transmission or transportation systems to the customer’s premises. Sometimes called “the last mile,” upkeep of distribution is the utility’s responsibility.

EmPOWER Maryland - EmPOWER Maryland is the state’s energy efficiency program with a goal of a 15% reduction in energy use and 15% reduction in peak demand per capita by the year 2015 (based on 2007 levels).

Energy Audit - An energy audit is a comprehensive investigation of an energy consumer’s energy usage, which typically takes several hours for homes and several days for commercial entities. The EmPOWER Maryland program reduces the cost of an energy audit substantially.

Energy Cooperatives (“energy co-op”) - In some parts of Maryland, an energy co-op acts as the energy supplier, the utility, and the owner of generation. There is no consumer choice in these markets. 

Energy Storage – Energy storage is a broad category of technologies that can store energy for use at a later time. It is particularly useful with renewable energy sources such as wind or solar, which are intermittent . There are several technologies that researchers are looking at to find the most efficient and cost-effective solutions. These include flywheels (which store energy through motion), molten salt (which store energy through a chemical reaction), large-scale batteries, and vehicle-to-grid resources, such as electric vehicles that can store energy and discharge to the grid when needed.

EVs - Electric Vehicles (EVs) run on an engine charged by a battery. They need to plug into an electricity source to recharge the battery and can potentially discharge electricity back to 
the grid. 

Fixed  Rate Electricity - A fixed rate product provides a firm, fixed price for a specified term, usually one or two years. There is usually a cancellation fee associated with these products.

Fuel Cell – Is a device that converts chemical energy from a fuel into electricity. Future-oriented research is looking to utilize hydrogen for the fuel, but fuel cells can also use natural gas 
and methanol. 

Fuel switching -- means the substitution of one energy source for another in a particular end use or process, as a result of changing relative prices or technologies.

Geothermal  Energy – Geothermal energy is energy that utilizes heat from the earth. Three things are needed to produce geothermal energy: heat; a working fluid such as water or steam; and permeable rocks which allow the working fluid to move within the geothermal reservoir, picking up heat which can be brought to the surface through a geothermal well.

Green Energy – Green energy in the retail electricity context is electricity consumers can buy that comes from “green” sources, usually wind power. Green energy is typically more expensive, but has less environmental impact than standard energy. 

Home Performance with Energy Star – A national program run by the U.S. Department of Energy and the U.S. Environmental Protection Agency, designed to promote more energy efficient homes.

Hydraulic fracturing (“fracking”) - Fracking is a process for extracting natural gas from previously hard-to-reach areas. The driller injects waters and chemicals into the well to fracture the rocks down below, letting the natural gas escape. 

Hydrogen – An abundant chemical element, typically used in a Fuel Cell to create energy.

Hydropower - Hydropower utilizes the natural flows of water to spin a turbine and create electricity. 

Industrial Energy Customer – One of three principal classes of energy customer. The classification of industrial customer is made either because the consumer 1) is a manufacturing, construction, mining, agriculture, fishing or forestry establishment or 2) uses an amount of electricity that exceeds some specified limit.

Intermittent or Intermittency -  Some renewable resources such as wind and solar cannot produce at all times and are thus called “intermittent.” For example, if the wind is not blowing, a wind turbine does not work. 

Investor-Owned Utilities (IOUs) - The regulated utilities that maintain the infrastructure of the distribution grid or pipelines, provide service to those that don’t switch to a REP, and administer billing and collection of fees or taxes. The PSC regulates the prices IOU’s can charge for standard service in electricity or natural gas. IOU’s do not own any significant generation.  The EmPOWER Maryland program is run through the IOUs .

kW - (kilowatt) is a unit of power, used to express how much a generation source can produce in an instant at its maximum capacity. It measures capacity, not actual production. Actual production over time is measured by kWh.

kWh - (kilowatt–hour) is a unit of electrical energy used or produced in a specified time period. When discussing how much electricity a generation source produces, kWh is the most common measurement, and it’s given over a specific time period. For example, a residential solar system can be said to produce 12,000 kWh a year. 

Land-based Wind – Land based wind can either be large wind farms or community scale. Large wind farms use wind turbines that have a nameplate capacity of 2-3.5 megawatts (MW). In our region, wind farms typically have from 10-50 turbines, usually on ridge lines. Community wind is much smaller in scale, with turbines that are no bigger than 50 kilowatts (kW), and can be designed with only one turbine or maybe a handful. 

Large Hydro - Large scale dams that block rivers and produce significant amounts of power.

Liquified Natural Gas (LNG) – LNG is made by converting natural gas to liquid. It can be used for fuel for vehicles, but is far less common than CNG for that use. 

LNG Terminal - An LNG terminal is a facility where natural gas is turned from a gas into a liquid in order to be placed on a tanker for shipment overseas. The process requires a power plant on-site.

Load Serving Entity (LSE) – A LSE is an entity that delivers electricity or natural gas. It can be an Alternative Electricity Supplier, Natural Gas Supplier, or a Utility. 

Maryland Home Energy Loan Program (MHELP) - MHELP is a program run by the Maryland Clean Energy Center in partnership with the MEA and support by the U.S. Dept. of Energy. Its aim is to expand access to energy efficiency upgrades by providing low cost loans to homeowners.

Microgrids – A self-contained electricity grid that can be disconnected from the larger grid if need be.  A microgrid can be on a college campus or military base, for example. It requires its own source of generation.

Multi-Level-Marketing (MLM) - Some suppliers use MLM to sell their products. In this scheme, a person signs up as an agent for the supplier, though not an employee, and sells their products to consumers, usually in the residential space. Consumers who sign up for the service can then become agents themselves and sell the product to others. The agents in a MLM program typically do the work part-time as a way to supplement their income . 

Nameplate Capacity - The maximum amount of energy a generator could produce in an instant. The higher the nameplate capacity, the more power a generator can make. 

Natural Gas Supplier - Entities that supply natural gas by purchasing it on the wholesale market and selling it at retail to customers at rates that are not subject to government approval. 

Net Energy Metering - means measurement of the difference between the electricity that is supplied by an electric company and the electricity that is generated by an eligible customer–generator and fed back to the electric company over the eligible customer–generator’s billing period.

Offshore Wind– Offshore wind is wind power produced by turbines placed off the shore in shallow water. Offshore wind typically produces more power because the turbines are larger than land-based wind, and the wind is more consistent over the water. There are several operating offshore wind farms off the European coast. 

Opt-in Aggregation - Opt-in Aggregation is when a group of residential and/or C&I ratepayers actively opt-in to join an aggregation pool, which will then bid out for electricity or natural gas services using the larger group buying power to hopefully achieve better terms. 

Opt-out Aggregation - Opt-out Aggregation is when the government puts residential and/or C&I ratepayers into an aggregation pool and somebody can only get out of the pool by actively opting out. 

OREC - An OREC is a REC from an offshore wind generator.

Peak Demand - Peak Demand is the maximum amount of electricity an end-user needs at the time when it’s using the most electricity at a given time. 

Peak Load Contribution (PLC) - PLC is a designation for electricity users that describes the charge they will pay relative to their peak demand. The PLC charge is higher for end users who have higher peak demands. If an end user lowers its peak demand, it will see a lower PLC charge in the future.  

PV – See “Solar PV”

Plug-in Hybrid - A vehicle that uses both a gasoline internal combustion engine and a battery powered engine. The battery can be recharged by plugging the vehicle into a power source and often it can run on battery power alone. 

Power Purchase Agreement (PPA) - A financial agreement in which a power generator agrees to sell the power produced by its generation to a customer at rates that can be variable or fixed. Wind generators typically sign PPAs for long terms, from 10-25 years.

Propane – Propane is normally a gas, but can be compressed into liquid form. It is a gas that is the byproduct of natural gas processing and petroleum refining. Propane has a wide variety of uses, and is increasingly being used as a vehicle fuel in the United States.

Quick Home Energy Check-up (QHEC) - A QHEC is a free brief energy assessment for residential ratepayers as part of the EmPOWER Maryland program. It also includes free compact fluorescent lights, smart power strips, and other items. 

Regional Greenhouse Gas Initiative (RGGI) - RGGI is a compact between states to reduce greenhouse gases from power plants. Maryland is a member of RGGI.

Renewable Energy Certificate (or Credit) (REC) –A REC represents the environmental attributes associated with renewable energy. A REC can be sold separately from the underlying physical electricity associated with renewable based generation.  RECs are used by electricity suppliers to meet Maryland’s RPS compliance. They can also be sold as part of a voluntary purchase by consumers. 

Renewable Energy- Renewable energy sources regenerate and can be sustained indefinitely; these include biomass, hydropower, geothermal, wind and solar.

Residential Energy Customer –  One of three principal classes of energy customers. Residential customers are private households that consume energy primarily for space heating, water heating, air conditioning, lighting, refrigeration, cooking, and washing and drying clothes.

RPS - Renewable Portfolio Standard (RPS) is a mechanism many states use to incentivize the deployment of new renewable energy generators. The basic approach of the RPS is to require every entity that sells electricity in the state (LSE’s) to have a percentage of renewable energy in their mix. There is typically an Alternative Compliance Payment (ACP) that acts as a penalty for LSE’s that fail to meet the standard. 

RPS Tier 1 - In Maryland, Tier 1 in the RPS is the category for most energy sources that qualify for the RPS. The Tier 1 ACP is higher than Tier 2, and Tier 1’s requirements do not sunset.

RPS Tier 2 - In Maryland, Tier 2 refers to large scale hydro and any other energy source that is not in Tier 1. Tier 2 sunsets after a set period of time and has a lower ACP than Tier 1. 

Run of the River Hydro – Usually small scale, these small dams are placed off to the side, outside the main river’s run, in order to enable fish to freely traverse the waterway. 

Slamming - The unauthorized switching of a customer’s account to another utility or competitive energy supplier without the customer’s consent.

Smart Grid – Smart grid is the general term usually meaning an electricity grid that allows for two way communication between those that deliver energy and those that use energy. 

Smart Meters or Advanced Meters – Digital electricity meters that provide more detailed and exact measurement of electricity use as well as other functions such as outage detection. Smart meters can communicate frequently with the utility.

Solar Power Purchase Agreement (SPPA) - A SPPA is a financial agreement in which a developer arranges for the design, permitting, financing and installation of a solar energy system on a customer’s property, typically at little to no cost. The developer sells the power generated to the host customer at a fixed rate, often with an escalator clause, where the rate rises each year of the agreement.

Solar PV – Solar PV (photovoltaics) systems do not have the moving parts or steam production found in most other electricity generation systems. Instead, the sunlight shines on the solar cell and causes an electric current to be generated directly. Common uses are to generate power in a grid-connected system for use on-site (residential, commercial, and other buildings, or groundwater remediation); other (larger) systems generate power that is provided directly to electric utilities.

Solar Thermal - Solar Thermal is also known as “solar hot water,” as it is an application that uses the heat from the sun to warm up water, which can then be used in a business or a home. Residential systems typically consist of two large panels and a system to pump the water. 

SREC - An SREC is a REC from a solar PV system or a solar thermal system.
Standard Offer Service (SOS) - SOS is the default rate electricity ratepayers pay if they do not switch to a Retail Electricity Provider. It is a rate charged by the utility with approval by the PSC, based on wholesale electricity auction results.

Strategic Energy Investment Fund (SEIF) – The proceeds from Maryland’s sale of carbon allowances, which is part of the RGGI structure, fund the SEIF. The SEIF has mainly been used to help lower income Marylanders pay their energy bills and to fund energy efficiency investments.

Sustainable Biomass - Biomass fuels that have a neutral carbon cycle with few if any emissions, and are easy to regrow, are called “Sustainable Biomass.” 

Third Party Verification - A process by which an independent company (the third party verifier) confirms with the customer that the customer understands and wants to complete the transaction initiated by the energy supplier salesperson. Third party verification is mandatory for door-to-door and telemarketing sales in many states, and can take a number of forms, including a conversation with a live telephone operator or an automated Interactive Voice Response system.

Tidal Energy – Utilizes the naturally occurring motion of incoming and outgoing tides to produce energy. Tidal energy is still in its infancy and does not yet have any large scale commercial operation.

Time-of-Use Meter - Measures customer electricity use 
and sometimes demand and records that data, along with the time of day, so the utility or supplier can bill the customer according to the charges established in the customer’s time-differentiated rates.

Transmission – The high voltage system that carries electricity from generation to the various distribution systems. 

Variable Rate Electricity - A variable rate product is one that can change price from month to month with no cap on the limit of how high or low prices can go. Variable rate products typically do not have cancellation fees.

Waste to Energy – Waste to Energy is energy recovery from waste by converting refuse materials into useable heat, electricity, or fuel through a variety of processes, including combustion (incineration), gasification, anaerobic digestion, and landfill gas (LFG) recovery. 

Wind Power - Wind power is derived from wind spinning a turbine that produces electricity. It does not produce 
any emissions.