Octopus launches flexibility scheme to prevent blackouts

Octopus Energy has launched a new scheme to enable its 1.4 million smart meters customers to earn money by reducing their electricity consumption to help avert the risk of blackouts this winter.

The Saving Sessions scheme has been established to provide flexibility to the power grid as part of National Grid Electricity System Operator’s new Demand Flexibility Service.

The service is one of several contingency measures the ESO has been developing in recent months to address the risk of gas shortages this winter and avoid the need to cut power supplies to consumers if this leads to reductions in gas generation.

Octopus Energy said it expects customers participating scheme, which is also open to its 5,000 business customers, to save an average of £4/kWh for reducing their consumption when compared their normal usage during periods of peak demand. The scheme will run from November 2022 to March 2023.

The supplier said this type of service was successfully tested earlier this year when it worked with the ESO to hold the UK’s largest domestic flexibility trial to date, with more than 100,000 of its smart meter customers signing up. It said the trial proved that households can be encouraged to use less energy during periods of high demand for relatively small financial incentives.

Customers participating in the trial were emailed and texted in advance to let them know two-hour slots in which they would be paid to reduce their consumption. During each turn down event, they reduced their consumption by an average of 0.7kWh, saving £0.23, although some participants earned as much as £4.35. In total, participants reduced their consumption by 197MWh.

Greg Jackson, chief executive of Octopus Energy Group, said: “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.

“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 announcement comes after the ESO published its Winter Outlook for 2022/23 on Thursday (6 October), in which the body said it expects the Demand Flexibility Service to provide 2GW of potential demand reduction to help meet demand during tight periods.

Based on discussions with suppliers and aggregators, National Grid said it is confident this amount of flexibility will be available through the service, describing this as a conservative aim.

The ESO said it believes there is significantly more flexibility potentially available from consumers, with the limiting factor being the compressed timeframe for the development and implementation of the service. It said the service could be rolled out on a wider and more enduring basis over following winters.

The body has also signed agreements to keep online 2GW of coal generation that was otherwise due to close this autumn.

ESO executive director Fintan Slye said he is “cautiously confident” that there will be adequate electricity supplies available to meet demand throughout the winter.

However, the ESO also stated that in a worst-case scenario explored in the Winter Outlook, in which there are significant reduced interconnector imports and 10GW of gas generation is unavailable due to fuel shortages, the body may need to cut power supplies to some customers for three-hour periods during the evening peak in demand to avoid wider blackouts.