National Grid has significantly increased its financial incentives for households that shift electricity use off-peak as part of renewed efforts to prevent rolling blackouts.
Its electricity system operator (ESO) has increased the incentive sixfold to £3 per kilowatt hour (kW/h) to encourage households to use their washing machines and appliances late at night, which could mean typical savings of £100 this winter.
National Grid warned this month that homes could face three-hour power cuts if Russia blocks gas supplies to Europe and Britain experiences sustained cold weather that increases the amount households use for heating. In response, it has stepped up plans for businesses and households to participate in its “demand flexibility service”, which launches next month.
Writing exclusively for the Guardian, Fintan Slye, director of National Grid ESO, said on Thursday: “Businesses and homes can become virtual power stations and, crucially, get paid as such.
“For a consumer, this could mean that a typical household could save approximately £100, and for industrial and commercial businesses with higher energy consumption, they could potentially save many times that.”
The ESO originally planned to pay households with smart meters around 52p per kilowatt hour in credit through their energy suppliers if they avoided using appliances at times when high demand overloaded the system.
However, the introduction of support for businesses and households, announced by Liz Truss last month, has made the scheme less attractive, at the equivalent of 34p per kW/h.
As a result, ESO said it expects to pay the equivalent of £3 per kW/h “as feedback suggests this will unlock most of the volume available”.
This money will be paid to suppliers in the form of a minimum price of £3,000 per megawatt hour (MW/h), but these payments can be higher.
Sly said he was “confident” the scheme could release about 2 gigawatts (GW) of energy, enough for about 1 million homes.
Since businesses consume much more energy than residential customers, their savings can be much greater.
Only Octopus Energy, which piloted the initiative earlier this year, has officially joined. However, E.ON and Ovo are understood to be among those interested in signing up.
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Under a similar scheme, which also launches next month, Ovo customers who use less than 12.5% of the energy they consume in a day between the peak hours of 4pm and 7pm will receive £20 each month in which they reach this goal. A five-month trial from November 1 could save them £100 as a result.
The more businesses and homes that join the ESO plan, the greater the reduction in pressure on the energy grid with consumers turning on their washing machines or appliances at night instead of at busier times.
Octopus and E.ON argued that the incentive for energy rebates was too low, arguing that fewer people would sign up as a result, the Times reported last month.
Slye also described how National Grid will inform households if there are power outages this winter. He said users would be given 24 hours notice and social media influencers could even be called upon to spread the word.
He wrote: “We are working with government and industry to plan this so that the message can be spread across all communities as quickly and accurately as possible. This will include press conferences, social media campaigns and working with influencers in various communities.
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