Scheme launches offering households energy bill discounts to change usage

Some households will be paid if they reduce their electricity usage during peak hours on some days this winter, after National Grid plans were given the go-ahead by the energy regulator.

The network operator, which revealed the service as part of efforts to avoid potential blackouts, has said households could save up to £100 through the limited scheme.

Energy watchdog Ofgem has approved the proposals for National Grid electricity system operator (ESO) to launch the programme, called a demand flexibility service, from November until March.

In the coming days, the ESO will seek to run the first tests for the service, which will also be available to businesses.

There will be a total of 12 test days to see how customers respond. Only customers with smart meters will be able to take part.

But there could also be several extra days where the grid asks households to shift their use.

Octopus Energy, which is so far the only supplier which appears to be signing up customers, estimates that the system might be used around 13 times this winter to prevent shortages of energy on the grid. National Grid has not released any such estimates.

So far around 350,000 of the company’s customers have signed up to the scheme. Ovo Energy has launched a smaller scheme that is not linked to National Grid’s, but offers similar benefits.

Households participating through the programme will be sent a message from their supplier if there is increased pressure on the system.

It will ask people and businesses who have signed up to reduce or move their electricity usage outside peak hours.

It comes a month after the operator warned in its winter outlook that the first planned blackouts in decades might hit parts of the country this winter if power plants cannot get enough gas to keep running.

In what it called an “unlikely” scenario, the ESO said that households and businesses might face planned three-hour outages to ensure the grid does not collapse.

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.”

So-called demand-side responses have been touted by industry experts for years as an effective way of preventing blackouts and helping households use energy at times when wind turbines and solar panels are producing lots of energy.

In future the hope is that a household’s smart meter can itself detect when there is a lot of cheap renewable electricity available, and at that point it can start charging the car, or heating the home.

The current set-up will likely not be automated for most households. Instead people will have to manually decide to put on their washing machine at a different time, or not plug in their electric car until later in the evening.

No one will be penalised for not taking part in the scheme, and those who sign up can still use as much electricity as they want during peak hours.