The ABCs of Energy

AER / Australian Energy Regulator

The Australian Energy Regulator (AER) was set up alongside the AEMC in 2005 to enforce the rules established by AEMC – primarily the National Electricity Rules (NER) and the National Energy Retail Rules (NERR). The AER’s responsibilities include regulating revenues of energy transmission and distribution network service providers, monitoring retail and wholesale markets and compliance, investigating breaches and enforcing penalties and establishing service standards for networks and guidelines. It is the National Electricity Market’s (NEM’s) regulatory body.

ARENA / Australian Renewable Energy Agency

The Australian Renewable Energy Agency (ARENA) was set up in 2012 to manage the Australian Government’s renewable energy programs. It is responsible for funding renewable energy research and development, demonstration and commercialisation. It also builds and supports networks to share knowledge, insights and data from funded projects.

Baseload

Baseload is electricity that is always available. It has historically been provided by coal-fired generation. Learn more here. See also: peaking power, intermediate demand.

Capacity

The sustained, full-load output of a power generation asset (such as a power plant). This is expressed as a capacity factor, which is a percentage.

Capacity factor

The percentage of energy a power generation asset (such as a power plant) produces compared to its total possible output. It is calculated annually. Capacity factor is almost always below (and can never exceed) 100% for several reasons, including downtime or reduced operation due to maintenance and faults and lack of available fuel (including wind and solar energy). See also: capacity, output.

Carbon credits / Australian Carbon Credit Units (ACCUs)

Permits are issued in return for provably storing or avoiding the creation of one tonne of CO2e. In Australia, carbon credits are called Australian Carbon Credit Units (ACCUs). They’re issued by the Clean Energy Regulator (CER) through the Australian National Registry of Emissions Units. ACCUs can be traded or sold, giving the company that holds them the right to emit one tonne of CO2e. See also: Clean Energy Regulator (CER)

Clean Energy Regulator (CER)

Set up in 2012, this statutory body is responsible for administering laws to reduce carbon emissions and increase the use of clean energy. The Clean Energy Regulator (CER) also issues carbon credits in Australia.

CO2e

A carbon dioxide equivalent, CO2e tells us how much global warming a given type and amount of greenhouse gas may cause, using CO2 as a reference point. For example, one tonne of methane is equivalent to 25 tonnes of CO2 over a 100-year period. See also: greenhouse gas, tCO2e

Coal-fired power stations

A coal-fired power station generates thermal power by converting heat energy into mechanical energy and then turning it into electricity. So how does this work? Coal is burned and used to vaporise water in a steam boiler. The steam expands in a multi-stage steam turbine, converting the thermal energy into rotational mechanical energy. This mechanical energy turns a generator that converts the mechanical energy into electricity.

Due to the slow start and shutdown times, coal-fired power stations are most commonly utilised as baseload power stations.

Controlled and uncontrolled load

Controlled load is a specific energy rate or tariff for high-energy usage appliances that are separately metered. For example, your hot water system would use controlled load electricity. They’re subject to a lower tariff, which makes them cheaper to use.

The catch is that electricity is only supplied to controlled load appliances for a limited number of hours in the day (generally off-peak hours). This is why off-peak energy is more affordable than on-peak.

Default market offer (DMO)

This is the regulated price cap on electricity that was introduced by the federal government in 2019. It applies to residential and small business electricity customers through flat rate and controlled load standing offers. Energy retailers are considered DMO-compliant if an “average customer” on the relevant standing offer rate would not pay more than the cap if they used a ‘model’ amount of electricity per year.

Currently, the DMO only applies to customers in New South Whales, South Australia and Queensland. For more information, watch our video What is the DMO and what does it mean for you?

Demand response (DR)

Demand response is when customers reduce their energy usage (usually during peak times) upon request to receive an incentive. Participating in demand response reduces stress on the grid and can lower your energy bill. Explore how you can take part in demand response with AGL here.

Energy efficiency

Energy efficiency is the act of achieving more while using less energy. Generally, this can relate to anything you do during the day that reduces the energy you consume – whether you’re using less or just using it better.

This can be as simple as replacing old incandescent light globes with high-efficiency LEDs or installing smart inverters and rooftop solar. Explore energy-saving habits and how to build an energy-efficient home today.

Electric vehicle (EV)

Any vehicle that uses one or more electric motors to move is an electric vehicle (EV). Generally, this term refers to an all-electric road vehicle with onboard batteries. But it also includes hybrid vehicles, electric bikes, scooters, motorcycles, trains, light rail, boats and planes. Learn more about AGL EV plans here.

Gigawatt (GW)

A gigawatt is the unit measure of 1 billion watts. It’s used to measure energy transfer. Due to its large scale, it’s often applied to very large power stations or even entire grids.

Greenhouse gas (GHG)

A greenhouse gas (GHG) is any gas that can absorb and emit radiant energy (like sunlight). GHGs in our atmosphere trap the sun’s heat, much like a greenhouse would. The primary greenhouse gasses include carbon dioxide (CO2, the primary metric for greenhouse gas measurement), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6) and more complex groups of chemicals: hydrofluorocarbons (HFCs)  d Perfluorocarbons (CFs).

Hydroelectricity

Also known as hydro power, hydroelectricity converts the force of moving water into electricity. Water flow under pressure turns turbines – often adjacent to large dams – which drive generators, that create electricity.

Kilowatt (kW)

A kilowatt is a unit measure of 1,000 watts. It’s used to measure energy transfer. Due to its size, it’s used to measure the power required by items like electric motors, heaters, appliances or the capacity of rooftop residential solar panels.

Kilowatt hour (kWh)

A kilowatt hour is used to express energy use. The energy your household uses is measured in kWh.

Kyoto Protocol

The Kyoto Protocol is a treaty extending the 1992 United Nations Framework Convention on Climate Change (UNFCCC). That framework saw states commit to reducing their greenhouse gas emissions. It was adopted in 1997 and entered into force in 2005. It comprised two commitment periods: 2008 to 2012 and 2012 to 2020. The Paris Agreement arose after negotiations on what measures would be taken after the Kyoto Protocol periods ended. See also: Paris Agreement.

Light-emitting diode (LED)

A light-emitting diode (LED) emits light through a complex physics process called electroluminescence. This is unlike a traditional light bulb, which emits light by heating an element until it glows through a process called incandescence. LEDs are known for having lower energy consumption and longer life and being smaller than a traditional light bulb. Learn more here.

Liquefied natural gas (LNG)

Liquefied natural gas (LNG) is exactly what it sounds like. It is usually methane with some ethane. First, the gas is purified, removing dust, water, heavier hydrocarbons and other impurities. It’s then cooled to approximately -162°C, which turns it into a liquid. In liquid form, it occupies about 1/600th the volume as it does when it’s gas, making it much easier to transport.

Megawatt (MW)

A megawatt is a unit measure of 1 million watts. It’s used to express energy transfer. Due to its size, it’s used to describe the power needed to supply large residential or commercial buildings or the capacity of large power stations.

National Electricity Market (NEM)

The National Electricity Market (NEM) is two things at once. It is a physical electricity transmission and distribution network made up of over 40,000km of cables. They run from Port Douglas in Far North Queensland through to Tasmania in the south and Port Lincoln in South Australia. It’s also a wholesale spot market that takes electricity from power generators and delivers it to residential and industrial consumers.

It is operated by the Australian Energy Market Operator (AEMO) and regulated by the Australian Energy Regulator (AER) using the National Electricity Rules (NER). Learn more here. See also: Australian Energy Market Operator (AEMO), Australian Energy Regulator (AER), National Electricity Rules (NER).

National Electricity Rules (NER)

The National Electricity Rules (NER) govern the operation of the National Electricity Market (NEM). These regulations are regularly updated by the Australian Energy Market Commission (AEMC), operating with the force of law in National Energy Market (NEM) states. They are enforced by the Australian Energy Regulator (AER).

The NER ensures that the 300 registered market participants – including transmission and distribution service providers, power generators and market customers – understand their rights and responsibilities. See also: Australian Energy Market Commission (AEMC), Australian Energy Regulator (AER), National Energy Market (NEM)

Paris Agreement

Also referred to as the Paris Accords and the Paris Climate Accords, the Paris Agreement is an international climate change treaty that emphasises dealing with greenhouse gas emission mitigation, adaptation and finance.

First signed in 2016, it now has 195 signatures as of November 2021. Its central aim is to strengthen the global response to the threat of climate change by keeping the global temperature rise this century below two degrees Celsius above pre-industrial levels. It also aims to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

Under the Paris Agreement, Australia’s Nationally Determined Contributions include a commitment to net zero emissions by 2050. See also: Kyoto Protocol, greenhouse gases (GHGs)

Pumped hydro

Pumped hydro is an efficient energy storage technique that uses gravity to store electricity. Excess energy supply pumps and stores large volumes of water at a geographical high point. When there is energy demand, quantities of the water are released and flow back down to a geographical low point, powering turbines as the water flows through. These turbines then generate electricity.

Reference price

The reference price acts as a point of comparison for residential and business customers on a single rate without a controlled load. It’s used in energy advertising to provide customers with a comparison of the “average customers’” bill under various electricity plans versus the reference price.

The default market offer (DMO) and Victoria default offer (VDO) are also used as reference prices: retailers are required to outline the cost comparison of their products against the DMO (in NSW, Queensland and SA) or the VDO (in Victoria). Learn more about the reference price. See also: controlled load; default market offer (DMO); Victorian default offer (VDO).

Solar power

Solar power is the conversion of the sun’s energy into usable electricity through a variety of techniques. This is commonly done through the photovoltaic (PV) cells in solar panels. Once they are installed, solar panels generate no pollution or greenhouse gases. They’re scalable to meet needs, and the materials they are constructed from are highly abundant.

Tariff

The tariff is the rate paid for electricity.

tCO2e

This is the unit measure of one tonne of carbon dioxide equivalent (CO2e). It’s used to express the global warming potential of greenhouse gases, using CO2 as a base for comparison. For example, one tonne of methane is the equivalent of 25 tonnes of CO2e over a 100-year period.

Thermal power

Thermal power converts heat energy into electricity, most commonly through steam. Water is heated and turns into steam. This steam then powers a turbine that drives a generator – converting it into electricity. The steam is then recondensed into a liquid. Thermal power usually uses fossil fuel heat generation: burning coal, natural gas or other carbon-heavy fossil fuels.

Turbine

A steam turbine is a mechanical system that takes thermal energy from steam and converts it to rotational mechanical energy. It’s made up of several stages of blades that take advantage of the expanding steam to convert thermal energy into rotational energy. This rotational energy moves a large driveshaft. The driveshaft operates an electromagnetic generator – creating usable electricity for the grid.

Utility-scale battery

Utility-scale batteries or grid-scale batteries are large battery facilities designed to support electrical grids. This can either be a wide area grid (like the National Energy Market (NEM) or smaller local areas (microgrids).

These batteries can react in milliseconds to grid fluctuations. In peak demand, they reduce strain on infrastructure, giving peaking power plants a window to start up. And through short-term storage, they can level the grid where variable energy supply sources – especially renewables – are used.

Virtual power plant (VPP)

A virtual power plant (VPP) is a collection of small batteries that work together to reduce stress on the grid. They’re predominantly made up of residential solar batteries. Owners of these batteries have given permission for their energy retailer to store and discharge excess energy as needed by the grid. The battery owner receives a feed-in tariff for energy exported to the grid.

Watt

A watt is equivalent to one joule per second. It’s a unit that expresses energy transfer and describes the power required to run small electric circuits – like light globes.