A new energy flexibility scheme introduced by Octopus Energy could save customers £100 on energy bills and reduce demand during peak usage hours.
Dubbed “Saving Sessions”, the scheme will entice customers of Octopus, who additionally have a smart meter installed, and around 5,000 businesses, to reduce energy usage at peak times with a financial incentive to do so.
This mirrors a similar measure introduced by OVO Energy called “Power Move”, which aims to reduce the demand on the energy grid and, much like Octopus, provide up to £100 in savings for households this winter.
OVO’s scheme will initially run as a trial that will gather data to develop the company’s understanding of usage during peak times, helping OVO to create further propositions that support a greener and more resilient energy system.
Octopus’ financial incentive scheme will see the energy supplier pay customers for every unit of energy saved compared to their normal usage during certain timeframes. Octopus expects to pay customers £4 on average, potentially saving customers around £100 over the course of the winter.
The scheme will run between November 2022 and March 2023.
“Let’s be very clear: this is a historic moment – we’re entering a new era of energy in which households are moving from passive offtakers to active enablers of a smarter, greener and cheaper grid,” said Greg Jackson, CEO of Octopus Energy Group.
“Instead of cutting off whole chunks of the country if we are short of gas, we can reward people for using less energy at times of peak demand. We were the first energy supplier to offer this service to our customers, and we hope others will follow our lead. By doing so, we can make blackouts a thing of the past, and bring costs down for everyone.”
The schemes could help mitigate the impact and likelihood of controlled emergency power cuts across the UK due to the high demand being forecasted for the winter months.
This had been disclosed in ESO’s Winter Outlook report, which this year models both the Base Case for the period 31 October 2022 to 31 March 2023, and an alternative scenario.
The operator warned that if importing electricity was not possible, the weather was cold and the wind generation low, there may be the potential to need to interrupt supply to some customers.
Financial incentive schemes being led by OVO and Octopus aim to reduce energy demand during peak times and prevent the need to use power cuts to ensure grid stability.
Octopus Energy together with National Grid ESO launched a ‘turndown’ flexibility trial which ran earlier this year.
As part of the trial, customers across Britain had been asked to turn down their electricity use over pre-defined two-hour windows during winter, when demand peaked and the grid was at its dirtiest. This included five to ten slots of between 12-2am, 9-11am and 4.30-6.30pm.
Octopus Energy monitored this using smart meter data and compared it to the consumers typical usage for that time based on their consumption data from the previous four weeks. Households that cut their electricity use by 40-60% during these periods received free electricity during them. Depending on the consumers tariff this was worth up to 35p/kWh.
Octopus had also been critical about the incentive trial led by National Grid ESO deeming that the energy discount was too low to attract popularity amongst customers meaning less would sign up.
“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 at the time.