Demand flexibility services for consumers could well be more successful should sufficient financial incentives be provided.
According to new research conducted by NTT DATA UK&I, 94% of consumers would change their energy habits to avoid peak hours if it saved them money, however it needs to be at least £26 a month.
The research found that the £26 threshold in saving is the incentive required for most of the 48% of consumers without a smart meter.
The cashback on bills could also be the incentive to reach 42% of households that have not yet installed a smart meter. Almost two-thirds of these households (61%) would install a smart meter if it saved them money, the data suggested.
Smart meters have seen increasing interest from energy consumers as a means to manage soaring energy bills by presenting opportunities to utilise low cost energy from the grid.
Because of this, Smart Metering Systems (SMS) said in September it had seen solid growth across the first half of 2022 with the company citing in its half year results that the run rate for smart meter installations increased to over 40,000 per month since Q2 2022.
This data coincides with National Grid ESO’s Demand Flexibility Service having gone live after Ofgem approved the proposal last week. The new service – which will see the ESO send a signal to participants to turn down their demand during constrained periods – is one of a suite of tools the operator will use over the coming winter to protect the energy system.
The Demand Flexibility Service will run from 3 November 2022 to 31 March 2023, with the first demonstration events expected in the coming days. For these, there is a guaranteed acceptance price of £3,000/MWh (£3/kWh) for providers of flexibility.
“For a modest financial incentive, consumers are ready and willing to change their peak rate energy habits to reduce the demand on the grid this winter,” said Eduardo Fernandez, head of gas, power and water at NTT DATA UK&I.
“For the energy suppliers that can develop pricing models which give consumers the savings they desire there is an opportunity to take market share during a period when most consumers are on the same standard variable rate.
“For the government, this may be the killer application that finally gets the remaining 48% of consumers to install a smart meter and vindicate the national rollout of smart meters. The widespread installation of smart meters combined with modest financial incentives may just reduce peak demand enough to save us from widespread blackouts this winter.”