Grid Glossary

AI inferenceData Centers

Running a trained AI model to answer queries or generate output. Inference draws less power per chip than training but runs constantly, creating steady, always-on load.

AI trainingData Centers

Teaching an AI model on massive datasets — a weeks-long process drawing tens of megawatts in dense, spiky bursts that stress local grid infrastructure.

Ancillary servicesPower Markets

Services beyond raw energy — frequency regulation, operating reserves, voltage support — that keep the grid stable second to second, procured in dedicated markets or through tariffs.

Balancing authorityElectric Grid

The entity responsible for matching generation to load in real time within its footprint and maintaining scheduled interchanges with neighbors — the fundamental operating unit of the North American grid.

BaseloadElectric Grid

Generation that runs near-continuously at high output — historically coal and nuclear — providing the steady foundation beneath variable demand.

Behind the meterPower Markets

On the customer's side of the utility meter: rooftop solar, batteries, and flexible loads that reduce grid demand while remaining largely invisible to system operators.

Bilateral contractPower Markets

A private deal between a buyer and seller of electricity, as opposed to a transaction cleared through an organized wholesale market.

Black startElectric Grid

The ability of a generator to restart without external power after a blackout — essential for restoring the grid. Typically hydro, batteries, or specially equipped gas turbines.

Bring-your-own-capacity (BYONC)Power Markets

A framework letting large customers supply their own capacity resources to meet resource-adequacy obligations instead of relying solely on the utility or market.

Capacity accreditationPower Markets

The process of assigning a capacity value to a resource based on its expected contribution during reliability-critical hours.

Capacity auctionPower Markets

A competitive auction, run by grid operators like PJM, where resources bid to provide capacity and the clearing price sets what load pays for reliability.

Capacity marketPower Markets

A wholesale market that pays resources for being available to generate when needed — distinct from energy markets, which pay for actual electricity produced.

Capacity performancePower Markets

PJM's capacity product requiring resources to perform during emergency conditions, with steep penalties for non-performance.

Capital expenditure (CapEx)Energy Investing

Money spent to build or acquire long-lived assets — power plants, transmission lines, data centers — as opposed to operating expenses.

Cash yieldEnergy Investing

Cash distributions paid to investors as a percentage of invested capital — the core attraction of contracted energy assets.

Clearing pricePower Markets

The single price at which supply meets demand in an auction; every cleared seller receives it regardless of their individual bid.

Coincident peakElectric Grid

The single hour of highest simultaneous demand across a system — the moment the grid is planned around.

ColocationData Centers

A facility where multiple customers rent space, power, and cooling for their own servers, sharing the building's infrastructure.

CongestionPower Markets

When transmission limits prevent the cheapest generation from reaching load, creating price differences between locations. See locational marginal pricing.

Contracted cash flowsEnergy Investing

Revenue locked in through long-term agreements like PPAs, which make energy assets financeable by giving lenders predictable income.

Cost of capitalEnergy Investing

The blended return investors and lenders demand for funding a project — the hurdle every energy investment must clear.

CurtailmentElectric Grid

Deliberately reducing output from a generator — usually wind or solar — when the grid cannot absorb it, often due to transmission limits or oversupply.

Data center tiersData Centers

The Uptime Institute's classification (Tier I through IV) of data center redundancy and fault tolerance, with Tier IV the most resilient.

Day-ahead marketPower Markets

A wholesale market where electricity for the next day is bought and sold in hourly intervals, locking in most generation schedules before real time.

Debt-service coverage ratio (DSCR)Energy Investing

A project's operating cash flow divided by its debt payments; lenders typically require 1.2x or more before financing energy assets.

Demand curve (VRR)Power Markets

The administratively set demand curve in PJM's capacity auction — the Variable Resource Requirement — that translates reliability needs into prices.

Demand responseElectric Grid

Reducing or shifting electricity use in response to price signals or grid emergencies — effectively a virtual power plant made of flexible load.

Distributed energy resources (DERs)Electric Grid

Small-scale resources on the distribution system — rooftop solar, batteries, EVs — that generate, store, or flexibly consume power near load.

DistributionElectric Grid

The local network of substations, feeders, and poles — typically 4 to 35 kV — that delivers electricity the last mile to homes and businesses.

Dividend yieldEnergy Investing

Annual dividends divided by share price — the metric income investors watch in utility stocks and yieldcos.

Dynamic line ratingsElectric Grid

Adjusting a transmission line's capacity limit in real time based on weather — wind cooling, ambient temperature — rather than conservative seasonal assumptions, unlocking hidden capacity.

Effective load-carrying capability (ELCC)Power Markets

A resource's contribution to meeting peak demand, accounting for its availability when the grid needs it most.

Energy marketPower Markets

The wholesale market where generators are paid for actual megawatt-hours produced — as distinct from capacity markets, which pay for availability.

ERCOTElectric Grid

The Electric Reliability Council of Texas, the grid operator for most of Texas — the only one of the three U.S. interconnections run as a single-state, energy-only market.

Federal Energy Regulatory Commission (FERC)Power Markets

The federal agency overseeing wholesale electricity markets, interstate transmission, and bulk-system reliability in the United States.

FeederElectric Grid

A distribution circuit running from a substation to neighborhoods, typically serving hundreds to a few thousand customers.

Final investment decision (FID)Energy Investing

The point at which sponsors formally commit capital to build a project — usually after securing permits, offtake, and financing.

Firm capacityPower Markets

Capacity backed by resources expected to be available during peak conditions, as opposed to energy-only or interruptible supply.

Flexible RAPower Markets

Resource-adequacy products that value not just capacity but the ability to ramp quickly and follow net load — increasingly important as solar reshapes daily demand curves.

Flip structureEnergy Investing

A tax-equity financing arrangement in which ownership flips from the tax investor to the developer once target returns are reached.

Forward curvePower Markets

Market prices for electricity delivery in future months and years — the benchmark developers and buyers use to value PPAs and hedges.

Frequency regulationElectric Grid

Second-to-second adjustments of generation or load to hold grid frequency at 60 Hz — the fastest ancillary service.

Gigawatt (GW)Electric Grid

One billion watts — the unit for large power plants and data center campuses. A typical nuclear reactor is about 1 GW.

Grid-enhancing technologies (GETs)Electric Grid

Hardware and software — dynamic line ratings, advanced conductors, power-flow controllers — that squeeze more capacity from existing transmission.

HedgingPower Markets

Locking in future electricity prices with financial contracts to manage exposure to volatile spot markets.

HyperscalerData Centers

A cloud giant — Amazon, Microsoft, Google, Meta — operating warehouse-scale data centers and driving the bulk of new large-load demand.

Independent system operator (ISO)Electric Grid

A neutral entity that operates the transmission system and runs wholesale markets without owning generation — e.g., CAISO, NYISO, MISO.

Interconnection queueElectric Grid

The waiting line of generation — and now large-load — projects seeking grid connection. Backlogs stretch for years and now exceed 2,000 GW nationally.

Investment tax credit (ITC)Energy Investing

A federal credit worth a share of a project's capital cost — historically the key subsidy for solar, and now for standalone storage.

Kilowatt-hour (kWh)Electric Grid

The billing unit of electricity: one kilowatt drawn for one hour. A typical U.S. home uses roughly 900 kWh per month.

Large loadData Centers

A single customer drawing tens to hundreds of megawatts — typically a data center — big enough to affect utility planning and rates.

Large-load tariffData Centers

Special utility rate structures for data centers, increasingly requiring long commitments and exit fees so other customers don't pay for stranded capacity.

Levelized cost of energy (LCOE)Energy Investing

The all-in cost per megawatt-hour of building and operating a plant over its life — the standard yardstick for comparing generation technologies.

LoadElectric Grid

Electricity demand — and, by extension, the customers and devices drawing it.

Load sheddingElectric Grid

Deliberately cutting power to some customers to prevent a wider collapse — the controlled blackout of last resort.

Locational marginal pricing (LMP)Power Markets

Nodal electricity pricing reflecting energy, congestion, and losses at each point on the grid — the price signal at the heart of U.S. organized markets.

Loss-of-load expectation (LOLE)Power Markets

The expected number of days per year when available generation can't meet demand; the classic 1-in-10 standard targets 0.1 days/year.

Megawatt (MW)Electric Grid

One million watts — the standard unit for power plant capacity and data center demand.

Merchant exposureEnergy Investing

The share of a project's revenue tied to volatile market prices rather than locked-in contracts. More merchant exposure means more risk — and a higher required return.

MicrogridElectric Grid

A local grid that can disconnect (island) from the main system and run independently on its own generation and storage.

Must-offer obligationPower Markets

A rule requiring capacity resources to offer into energy markets, preventing them from withholding supply to drive up prices.

Net CONEPower Markets

Net Cost of New Entry: the annualized cost of building a reference peaking plant minus its expected energy-market earnings — the anchor for capacity demand curves.

North American Electric Reliability Corporation (NERC)Electric Grid

The organization that writes and enforces mandatory reliability standards for the North American bulk power system.

Offtake agreementEnergy Investing

A contract to buy a project's output — a PPA is the power-sector version — that underpins project financing.

Peaker plantElectric Grid

A generator, usually a gas turbine, that runs only during high-demand hours. Expensive per megawatt-hour, but cheap to build.

PJM InterconnectionPower Markets

The largest U.S. grid operator, running wholesale markets across 13 states plus D.C. — including the benchmark capacity auction.

Planning reserve marginPower Markets

Generation capacity held above expected peak demand as a buffer — typically 15 to 20 percent — to cover outages and forecast error.

Power purchase agreement (PPA)Energy Investing

A long-term contract to buy electricity from a generator at set terms — the revenue foundation for most financed renewables.

Power usage effectiveness (PUE)Data Centers

Total data center energy divided by IT equipment energy. A PUE of 1.0 is perfect; hyperscalers now approach 1.1.

Production tax credit (PTC)Energy Investing

A per-megawatt-hour federal credit for generation — historically the key subsidy for wind.

Project financeEnergy Investing

Funding an energy asset with debt secured by the project's own cash flows rather than the sponsor's balance sheet.

Rate baseElectric Grid

The value of a utility's approved capital investments on which regulators allow it to earn a return. Growing the rate base grows earnings.

Real-time marketPower Markets

The wholesale market balancing supply and demand in five-minute intervals, settling deviations from day-ahead schedules.

ReconductoringElectric Grid

Replacing existing transmission wires with advanced conductors that carry more power on the same towers — among the fastest ways to add capacity.

Regional transmission organization (RTO)Electric Grid

A FERC-regulated entity operating transmission across multiple states and typically running wholesale markets. ISOs are the single-state cousins.

Resource adequacyPower Markets

The discipline of ensuring enough capacity exists to meet demand plus a reserve — the RA in capacity markets and flexible RA.

Scarcity pricingPower Markets

Market rules letting prices spike during shortages to reflect the true value of power when reserves run thin.

SettlementPower Markets

The financial true-up after electricity flows — reconciling what was scheduled, what actually ran, and what it all costs.

Special-purpose vehicle (SPV)Energy Investing

A standalone company created to own a single project, isolating its debts and risks from the sponsor.

Stranded powerData Centers

Generation with no economic path to market — often curtailed renewables — that data centers can sometimes tap cheaply by locating nearby.

SubstationElectric Grid

Where high-voltage transmission steps down to distribution voltages (or vice versa) — packed with transformers, breakers, and switches.

Tax equityEnergy Investing

Investment from entities with large tax bills that monetize federal energy tax credits in exchange for funding projects.

Terawatt-hour (TWh)Electric Grid

One billion kilowatt-hours — the unit for national electricity consumption. The U.S. uses roughly 4,000 TWh per year.

TransmissionElectric Grid

Bulk movement of electricity at high voltage — 115 kV and up — from generators to load centers over long distances.

Unforced capacity (UCAP)Power Markets

A resource's accredited capacity adjusted for its historical forced-outage rate — what actually counts in capacity markets.

Virtual power plant (VPP)Electric Grid

Aggregated distributed resources — batteries, thermostats, EVs — dispatched as a single resource to provide grid services.

YieldcoEnergy Investing

A public company owning contracted energy assets and paying out most cash flow as dividends — built for income investors.