National Grid will likely pay more than £2m to households, businesses and other entities to encourage them to reduce their peak-time power consumption on Tuesday.
The “demand flexibility” service, which encourages households to use less electricity during a specified period (between 4.30pm to 6.30pm), will be offered by the operator of the electricity system.
After a series trial sessions, the service was finally used on Monday. It is designed to reduce grid strain caused by cold weather between 5pm-6pm.
Octopus Energy piloted the scheme in January, before it was rolled out to all other suppliers in November. More than 1 million consumers and businesses have signed up.
The trials have shown that typical households have saved half an hour of electricity. This will amount to about £2 per household on Tuesday. National Grid’s cost is now at £2 million. The funds will be transferred to the participants, while suppliers keep a portion to cover their costs.
Octopus reported that 400,000 customers took part in Monday’s session. They were offered £3.37 per kilowatt-hour of electricity they did not use during the period. Octopus will offer £4 per kilowatt-hour on Tuesday, after National Grid offered higher prices.
Analysts at Bernstein predict that Octopus, E.ON and GridBeyond will all be part of the scheme on Tuesday.
Octopus estimates that a customer who declines 1kWh in 25 events at an average £4/kWh price could save £100 this winter.
Early trials showed that a household could save an average of 23p per event. Some participants saved up to £4.35 each session.
To participate, consumers must sign up for the service. The supplier will usually give consumers 24 hours notice about a savings session. Consumers then need to opt in.
National Grid is trying to balance demand and supply as a cold snap urges Britons to turn on their heating due to high energy bills.
On Monday night, the grid operator stated that it had requested three coal units to heat up this winter from its standby. These units, located at Drax in North Yorkshire as well as EDF’s West Burton Plant in Nottinghamshire, were prepared on Sunday for Monday’s supplies and then taken down.
It is believed that the trio will not be used on Tuesday.
After Russia cut the volume of gas exported to Europe, the units were put on standby.
There were concerns that Russia might cut supply completely. This could have a knock-on effect on the UK, causing power outages. The mild winter has helped to reduce the risk of this happening.