£100 saving to use energy off-peak as scheme goes live
A scheme rewarding electricity use outside of peak hours to avoid blackouts this winter has been given the go ahead by the energy regulator.
Last month, the National Grid ESO (Electricity System Operator) proposed creating a ‘demand flexibility service’ this winter, enabling households with a smart meter to be paid to use electricity outside of peak hours (4-7pm).
It came after National Grid warned that in the worst-case scenario, the UK energy supply may suffer blackouts this winter, particularly in periods of high demand, such as in the early evenings.
Energy regulator, Ofgem, has today approved the scheme which means it will be live until 31 March 2023.
During this time, the ESO will run 12 planned events or tests to make sure the service works and to ensure both suppliers and billpayers who have signed up to participate are rewarded.
Suppliers will alert qualifying customers about an upcoming test 24 hours in advance. They will then be asked to reduce their energy use during an hour chosen by National Grid.
The ESO said typical households could save approximately £100. Meanwhile, suppliers will be paid £3 per KWh saved which can then be passed on to billpayers, though the amounts will vary depending on the provider.
It is now urging providers to sign up to the scheme.
ESO said it will add a full list of participating suppliers to its website once providers sign and return their commercial agreements to it.
Participating suppliers will contact eligible households, and customers may also be able to register their interest.
British Gas and Ovo previously indicated they would take part in the scheme, while Octopus Energy ran a similar trial earlier this year which paid around 100,000 customers for reducing the amount of energy used in peak hours.
Earlier this week, Octopus revealed more than 300,000 customers had signed up to its ‘Saving Sessions’ to use energy outside of peak hours to earn OctoPoints. These can then be converted into cash, with average rewards this winter of around £36, but with savings of up to £100.
Financial return on electricity use
Fintan Slye, executive director of the ESO, said: “We are delighted that Ofgem have approved the use of our demand flexibility service this winter. It will help mitigate the potential risks that the ESO has outlined in its winter outlook and will allow consumers to see a financial return for reducing their electricity use at peak times.
“As a responsible operator of the electricity system we have developed this innovative demand flexibility service to compliment the robust set of tools we already use to balance the electricity system every day.”
Richard Neudegg, director of regulation at Uswitch said: “Many households are changing their energy habits to help manage rising bills, and this positive, practical scheme from the National Grid could be another way consumers can benefit from changing the ways they use energy around the home.
“It’s important that enough suppliers take part in this scheme to really see the benefit – and that real efforts are made to get the message out.
“Moving energy use to off-peak times will not be possible for every household, but could be beneficial for those who can.”