Businesses to be offered cash for reducing electricity use
Regulator Ofgem is to offer businesses the opportunity to reduce their electricity use during times of high demand in return for payment.
Businesses will be asked to reduce electricity in the winter between four and eight pm on weekday evenings, while the amount they receive would be determined through a tender run by National Grid next year.
The initiative is part of a set of measures that will be available for National Grid to use to manage tighter electricity supplies from next winter.
In Ofgem's 2013 electricity Capacity Assessment published this June, the regulators analysis showed that electricity margins could tighten in 2015-2016 to between around 2-5%, depending on the outlook for demand.
Ofgem considers it "prudent to provide National Grid with the option of extra tools" to help it balance the system against tighter electricity supplies from winter 2014/15.
Ofgem chief executive, Andrew Wright, said: "Our latest assessment on security of electricity supplies published this summer showed that electricity margins are set to tighten more quickly than previously expected in the middle of the decade. This is mainly because older coal power stations will close sooner".