UK’s National Grid is preparing to pay people to reduce their electricity usage at peak times again

Emily Gosden writes on The Times website about the plans to pay people to reduce their electricity use at peak times next winter. Are readers aware of such initiatives in other countries?

National Grid set to revive ‘demand flexibility’ payments for saving electricity

National Grid is preparing to pay people to reduce their electricity usage at peak times again next winter as it draws up plans to keep the lights on without emergency back-up coal plants.

Millions of pounds were paid to households that took part in the “demand flexibility service” last winter by rescheduling energy-intensive activities such as cooking or using washing machines.

National Grid, the company responsible for keeping the lights on, developed the novel scheme to reduce consumers’ power demand at peak times amid fears that Britain could be at risk of blackouts after Russia curtailed gas supplies to Europe. Although the winter passed without incident, experts have warned that the energy crisis is not over and that risks remain next winter, especially given the closure of two of the coal plants that National Grid paid to keep open as emergency options last winter.

National Grid has been consulting suppliers and the regulator over the future of the demand flexibility service and is drawing up plans to use the scheme again next winter, sources said.

Ofgem will have to sign off on the plans, which are likely to be formally tabled in the summer, but it is understood to have indicated that it also sees a role for the service again next winter.

People that signed up were notified typically a day in advance of the need to cut usage for a few hours, usually over the teatime peak. Using smart meter data, suppliers measured the reduction in demand and passed on the payments from National Grid. More than a million households took part. The scheme was used on a couple of occasions, but there were also test events and millions of pounds was paid out, including £5.3 million to almost 700,000 Octopus Energy customers.

The other measure National Grid put in place was to keep old coal plants open. However, two of them — EDF’s West Burton A plant and Drax’s coal units — shut at the end of last month.

Grant Shapps, the energy secretary, asked National Grid to explore keeping the plants on standby again for winter 2023-24, but EDF has ruled this out.

Fintan Slye, executive director of National Grid, said last month that he believed the risks to security of supply next winter “probably aren’t as great as they were”. However, he said he would “absolutely” like to see the coal plants remain open and that risks remained, including over French nuclear plants that have been plagued with safety outages and the extent to which the Asian economy rebounds and snaps up liquefied natural gas cargoes.

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