Octopus Energy and E.ON have deemed the energy discount incentive proposed by National Grid ESO’s demand flexibility service too low, arguing less customers will sign up because of this.
During this process however, both E.ON and Octopus have stated the plan risks failing due to low discounts, according to reports first published in the Times. To be a success, it needs revising of its pricing.
“As has been reported, two industry participants have provided feedback to the ESO as part of our ongoing consultation to define the scope and terms of the demand flexibility service we intend to launch this winter,” said a National Grid ESO spokesperson.
“As with all other feedback we receive as part of this consultation we will consider and review this information before submitting our final design to the regulator Ofgem to approve.”
The current scheme would aim to pay customers to cut electricity use at peak times, and only be available to homes that have smart meters installed to sign up to.
National Grid ESO’s current payment to customers on the trial scheme stands at 52p for each kilowatt-hour of electricity saved during peak times.
“Like in any new service, we need to find out what customers respond to and then adjust the price accordingly. So it’d be wrong to set a price before finding out what works for people,” said a spokesperson from Octopus Energy.
As indicated, Octopus Energy believes that further tests must be conducted to identify the viability in implementing the scheme. Should the figure be too high, less customers would benefit from the scheme that is aiming support households amid rising energy costs.
In order to increase the likelihood of more customers joining the incentive scheme, National Grid ESO must provide better prices to attract further customers, said Octopus Energy.
This is backed up by E.ON, which has also been involved in conducting trials, with the firm having stated the “current prices being discussed aren’t going to be enough to persuade people to take part”.
“We’re investigating the appetite of our customers when it comes to time-of-use tariffs but we believe the current prices being discussed aren’t going to be enough to persuade people to take part,” said a spokesperson from E.ON.
“This activity is designed to be a last resort measure at times of stress on the grid and we feel the reward to customers should match recent prices and give people a real reason to take part.
“Time-of-use tariffs allow customers to reduce their bills simply by changing when they use energy to cheaper times, and it means they can lower carbon emissions by taking advantage of periods when there is plentiful renewable generation on the grid or, for example, making best use of their solar panels at home or using the battery in their electric vehicle as a backup power source.”
The government revealed last week the price cap would be set at £2,500 for two years from October onwards as part of a range of measures designed to address the energy crisis.
The Energy Price Guarantee will also be brought in along with the existing £400 support package, which will be delivered to households by their suppliers over six months from October. It will save the average household £1000 over the course of a year, Truss stated.
While the additional support has been broadly welcomed by the industry as a short-term measure, it is designed to predominantly protect customers from price rises, rather than increase energy security.
Demand side response – such as National Grid ESO’s above scheme – is thought to provide another tool to boost security in the short term, helping to avoid blackouts over the winter period.