UK households to be paid to cut electricity use for second winter

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National Grid will pay British households and businesses to cut their power consumption during peak hours this winter for the second year running to help reduce the strain on the network and reduce the risk of blackouts.

The company introduced the voluntary scheme, known as the demand flexibility service, last winter to address concerns that Britain could face power shortages.

Fears of blackouts at times of high demand grew following Russia’s invasion of Ukraine, which disrupted gas supplies, and problems at some of the nuclear power stations in France, which is Europe’s biggest exporter of electricity.

Both of those factors are less acute this year and National Grid said in June it was expecting a healthy level of supplies over winter. But the company said retaining the scheme would give it “additional tools” for managing the network and help it “build further resilience”. 

The scheme is also part of a push to persuade consumers to become more flexible about their electricity usage to help manage the grid as it becomes increasingly dependent on intermittent wind and solar generation. Electricity supply and demand has to be constantly matched by National Grid to avoid blackouts.

Jake Rigg, corporate affairs director at National Grid’s Electricity System Operator, said it was “keen for more consumers, both large and small, to get involved”.

Last winter, the service was only activated twice when electricity supplies were forecast to be low. But National Grid also ran 20 test events, for which participants were also paid, and it plans to run 12 this winter. It said 1.6mn households and businesses took part overall last winter. 

National Grid will guarantee suppliers £3 per kilowatt-hour saved for the first six test events this winter. Payments during other runs of the service will depend on competitive tenders. Suppliers can decide how much of these payments they pass on to consumers. British Gas and Octopus Energy are among the suppliers expected to take part.

Separately, Britain’s energy regulator on Thursday confirmed plans to crack down on power stations trying to game the power market to make “excessive” profits. 

Ofgem said it had found evidence of some electricity generators switching off during winter afternoons, only to offer to switch back on at a “greatly increased price” in the market for back-up power supplies. 

It said it would introduce licence conditions from the end of October to clamp down on this practice, with fines of up to 10 per cent of turnover for any breaches. 

The regulator investigated generators’ behaviour after the costs of the so-called “balancing market” for back-up supplies hit £1.5bn during the winter of 2021-22, more than three times the average for the three previous winters. 

Eleanor Warburton, Ofgem’s acting director for energy systems management and security, said the regulator would “not tolerate electricity generators attempting to take advantage of the balancing mechanism to make excessive profits”.