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Octopus Energy embraces negative pricing with 'plunge' tariff

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Octopus Energy has taken the plunge and is now offering customers cash in exchange for taking excess electricity off the grid at times of negative pricing in an extension of its ‘transparent’ tracker tariff released last year.

The Agile Octopus plan offers customers an incentive to shift their energy use outside of the 4pm-7pm peak, with ‘plunge pricing’ being introduced to take advantage of periods when wholesale prices fall below zero as a result of excess generation across the UK.

This ‘world first’, according to Octopus, will allow customers to share in the cash available to suppliers when they are paid to take excess energy during these periods, effectively paying them to use energy during times of over-supply.

Greg Jackson, founder and chief executive of Octopus Energy, said: “This tariff is groundbreaking. By reflecting the real cost of energy on the grid every half hour, customers can capitalise on times when prices are especially low.

“Indeed, if the wholesale price goes below 0p/kWh, Octopus Agile will actually pay you to take the unwanted energy from the grid. As renewable energy production grows these events are only going to become more frequent.”

The offer – using 100% renewable electricity – is made possible by Octopus’ dynamic pricing structure, which uses half hourly energy prices set daily at 4pm for the following 24 hours. Prices are tied to public wholesale costs to ensure full transparency, with charges then calculated for each customer using the half-hourly consumption data from a smart meter.

Customers will be alerted to ‘Plunge Pricing’ via text message, email or via their online dashboard, and once a month they will be sent a full breakdown of their half-hourly energy pricing and usage.

Negative pricing has been growing in regularity in the UK as more renewable generators have been added to the grid in recent years. The morning of 14 January saw system buy and sell prices fall below zero for four consecutive settlement periods, reaching -£68.43/MWh between 7-7:30am.

Octopus says the new tariff will allow customers who can shift their energy consumption – whether by setting timers for dishwashers and washing machines, using storage heaters, or setting the time for their electric vehicle charging – to get rewarded for helping reduce the stress on the grid at these times.

The supplier has said there were four “Plunge Price” events over the last 12 months when the unit price of electricity dropped below 0p/kWh.

The average home with a typical consumption profile would have saved £231 compared to the average Big 6 variable tariff, while a home-charging EV owner could have saved £669 compared to the average Big 6 variable tariff by shifting their charging behaviour.

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