Britain’s biggest energy suppliers have signed up to a scheme that will offer discounts to customers who cut their electricity usage at peak times.
The sector regulator Ofgem formally approved a National Grid scheme that could save households £100 on their bills this winter and reduce the risk of power cuts.
Last month, the Guardian revealed the incentive for households to sign up to the scheme was being increased sixfold to £3 a kilowatt hour. Commercial energy users, such as factories which use significant amounts of power, will receive the same increased rate, at £3,000 per megawatt hour.
British Gas owner Centrica, E.ON and EDF have confirmed they will follow Octopus Energy, which now also owns Bulb, in participating in the National Grid scheme.
It is understood most large retail suppliers are considering signing up. However, Shell Energy, the retail arm of the oil and gas giant, told the Guardian it is “unlikely to take part this winter”.
National Grid’s electricity system operator said an initial test phase of the service will last until March. The scheme is only open to less than half of households in England, Scotland and Wales, specifically the 14 million with smart electricity meters.
Customers will be given 24 hours notice to shift their power usage from a peak period – typically 4pm to 7pm – to encourage them to use power hungry appliances, such as tumble dryers, outside this timeframe.
National Grid warned last month that in a worst case scenario – such as a sudden cut off in Russian gas supplies to Europe and a cold weather snap – Britain could experience three-hour power cuts this winter.
The Guardian revealed this week that government officials were examining Programme Yarrow, emergency protocols drawn up in case of an unexpected nationwide blackout.
The demand flexibility service is part of National Grid and the government’s efforts to ensure Britain has robust energy supplies this winter.
The Department for Business, Energy and Industrial Strategy has also signed deals to put coal-fired power stations on standby this winter.
British Gas, Great Britain’s biggest domestic energy supplier, plans to begin trialling the demand flexibility service later this year with a target of reducing peak time energy use by 30%.
A spokesperson for the company said: “By encouraging consumers to reduce their usage at peak times we can balance demand on the grid while helping consumers save on their energy bills. We are working on how this scheme can work best for our customers and fit in with their habits around the home.”
E.ON, the country’s second largest supplier, has written to customers to ask if they are interested in taking part.
A spokesperson said: “E.ON Next is taking part in the National Grid’s Demand Flexibility Service to help our customers lower their energy costs by reducing their energy consumption.”
EDF said it has “selected a small group of customers” to take part and will write to them later in November. The company apologised that not all customers could sign up and said those not invited would be unable to participate.
“If the trial is successful this year, more people might get the chance to take part in future,” it said.
