Lowering bills, cutting carbon
12 Oct 2022
Two energy suppliers are trialing a scheme that will reward energy users for reducing power consumption in peak hours. In this article, we look in detail at the ‘demand flexibility’ pilots run by OVO and Octopus Energy, why they’re needed, how they will work and what it could mean for households.
Worries about shortages of natural gas across Europe have already driven up energy prices to record levels. Now, there are concerns that it could lead to nationwide blackouts over the winter. Because we use gas to generate a lot of our electricity, shortages of gas have a knock-on impact on the electricity grid.
National Grid ESO (the company that manages the UK electricity grid) is making plans for a worst case scenario where there is a dramatic shortage of gas available, as well as reduced electricity supply from other sources. Should that happen, National Grid ESO plan to turn off power in different locations at different times of day, for up to three hours at a time.
It’s worth stressing that this scenario is deemed to be highly unlikely based on National Grid ESO’s current forecasts. But, to combat the chances of this worst case scenario, National Grid ESO is working with energy suppliers to pay people to not use electricity, reducing demand at key times.
In February and March 2022, Octopus energy trialled a demand flexibility scheme known as ‘Saving Sessions’ which saw eligible households texted with a two-hour slot during which they were asked to ‘turn down’ their usage. Over 100,000 customers signed up, and Octopus found they were able to shift 197 megawatt hours (MWh) of electricity out of peak hours, which equates to 2.5 million hours of Netflix streaming.
Given its success, Octopus are to bring back their Saving Sessions for this winter and expect up to 1.4 million customers and 5,000 businesses to save up to £100 on their winter bill.
OVO Energy are now also encouraging their customers to use energy at ‘greener’ times of the day under a scheme they’re calling ‘Power Move’. OVO says that typical households consume 19% of their daily energy usage between 4pm and 7pm. They’re offering incentives of £20 a month to households that are able to reduce this to 12.5% of their daily use or less. This will be in addition to other support with energy bills being provided to UK households by the government.
The scheme will be available to customers from 1 November 2022 to 31 March 2023. Interested households can apply from mid-October.
On the surface, demand flexibility is a great way to relieve stress on the National Grid during peak hours. In turn, this will reduce demand for natural gas and allow more of our overall supply of electricity to be sourced from greener generation such as wind and solar. Experts predict that the scheme could reduce the demand for power by up to two gigawatts (GW) – enough to power about 600,000 homes.
However, some industry experts believe that UK households will not take part in the necessary numbers because the incentives offered are too low. Additionally, the scheme will only be available to certain types of household, such as those with a smart meter. It is also not yet certain how many suppliers will adopt the scheme.
