‘Very encouraging’: Plan to pay UK energy customers for avoiding peak-time use proving popular
More than one million homes and businesses have tested a new scheme enabling them to be paid for avoiding energy use at peak times, collectively saving some £2.8m.
Published 20th December 2022
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British Gas, in its most recent trial, paid homes £4 per KWh of energy saved. Stock image.
That is according to the National Grid Electricity System Operator (ESO), which operates the Demand Flexibility Service offering and posted its latest update on the approach late last week.
The ESO first launched the Demand Flexibility Service on a trial basis earlier this year, in partnership with Octopus Energy. This enabled it to prove the proof of concept for a wider scheme, which it has been scaling up through a series of demonstration periods in partnership with some of the UK’s biggest energy retailers including British Gas and Ovo Energy.
The idea is to help homes save on their skyrocketing energy bills, by paying them to help reduce peak demand, thus building in flexibility to the energy system and reducing pressures.
Late last week, the ESO confirmed that both the first and second demonstration periods “exceeded expectations” in terms of how many homes and businesses took part – and how much they were able to reduce their electricity use during the early evening peak period. For this period, participants were asked to avoid using devices such as electric car chargers and tumble driers. They were paid in line with the amount of energy saved over two hours, with savings tracked using smart meters.
A total of 314.2 MWh of demand reduction was recorded during the first two test period, the ESO has confirmed. The first test saw energy consumers decreasing their electricity use by 50% more than anticipated, the proportion being 35% for the second.
The ESO has not yet finished analysing data on the third, fourth, fifth and sixth tests . However, it has been confirmed that more than one million homes and businesses have signed up to participate in the Demand Flexibility Service. It estimates that these energy consumers will collectively have saved more than £2.8m.
A further six tests are planned to take place by the end of March. The ESO will facilitate at least two every month for each participating energy provider.
The National Grid ESO’s head of national control Craig Dyke has called the initial tests “a major milestone in the evolution of consumer flexibility in the UK”.
He added: “This service successfully proves that consumers up and down the country are standing by to get involved in flexibility solutions. These test results show that if called upon this service will help the ESO balance the national electricity network this winter and is a valuable addition to the ESO’s operational tools.”
Responding to the ESO’s results from initial tests. The Association for Distributed Energy’s (ADE) flexibility policy manager Sarah Honan said they were “very encouraging”.
Honan said: “This winter, the past two weeks in particular, has been challenging for homes and businesses across the UK and ensuring we take as many lessons as possible from the demand flexibility service will be absolutely crucial for the success of future iterations.”
Honan is referring to the recent cold snap that gripped the UK for more than a week as cold air swept down from the north of the globe.
I have very mixed feelings about this scheme. On the one hand, if it reduces wasteful consumption, that’s a good thing.
However, as a household we already use as little as we can and cannot cut further. In that respect, this scheme rewards those that were previously wasteful and can still cut their consumption. You wouldn’t pay someone to stop breaking the law, but in effect this is designed on that basis.
Additionally, the way our supplier (Shell) is administering it is very sneaky. The only way you can take part is to give them consent for marketing purposes, so they can send an e-mail 24 hours prior to the event. This also means they can use this change of consent for wider marketing activity, which I don’t want. As a business, they have made a deliberate choice to administer it in this way and from a Data Protection Act compliance perspective, consent is not required as the legal basis for data processing is covered under the already existing contractual agreement between supplier and customer.
In short, Shell are using it to force customers into giving consent for other marketing purposes, which isn’t necessary. That doesn’t sit well with me.