Energy saving scheme: what is National Grid discount, how much can I save, do you have to have a smart meter?

Households will be paid for using electricity during off-peak hours

Households across the UK are set to get money off their energy bills if they reduce their electricity usage at certain times of the day under emergency blackout plans.

National Grid is planning to launch a discount scheme that will reward households for using electricity during off-peak hours. Energy watchdog Ofgem approved the proposals for National Grid electricity system operator (ESO) to launch the programme, called a Demand Flexibility Service, from November until March as part of efforts to avoid potential blackouts this winter.

The scheme was launched earlier this month and has already been tested twice but has not yet run live. National Grid is set to confirm on Monday whether to activate the Demand Flexibility Service amid concerns that Britain’s energy supply on Monday and Tuesday evenings could get tight.

It said: “An anticipated DFS requirement notice has been published for tomorrow, Tuesday. This is an indication that a DFS service requirement might be published today at 2.30pm.”

Households participating through the programme will be sent a message from the network if there is increased pressure on the system. It will ask people and businesses who have signed up to reduce or move their electricity usage outside peak hours. It means that people could be paid to run their washing machines at night, or charge their electric cars away from times of high demand.

Households will be paid if they avoid using electricity during peak demand (Photo: Adobe)

How much will households save with the scheme?

National Grid announced an increase to the amount it will pay households for using electricity during off-peak hours last month, with the financial incentive for those who switch their power usage away from high demand times now set at £3 per kilowatt hour instead of 52p.

The ESO increased the incentive in a bid to ease pressure on the UK power grids this winter amid warnings over potential blackouts. The energy discount scheme aims to encourage households to use their washing machines and appliances late at night. The network operator said households could save up to £100 through the limited scheme.

Writing in The Guardian, Mr Slye explained: “Businesses and homes can become virtual power plants and, crucially, get paid like one too. For a consumer that could mean a typical household could save approximately £100, and industrial and commercial businesses with larger energy usage could save multiples of this.

“We are working with Ofgem to get this scheme launched in November and for it to be rolled out through energy suppliers. If you are interested in participating or understanding what you could get paid, please contact your energy supplier.”

Ovo Energy, which is running its own version of the scheme, said that a typical household uses a fifth of their daily energy between 4pm and 7pm and customers could make a saving up to £100 if they signed up to use energy at greener times of the day.

Do households need a smart meter to take part in the scheme?

The money-back service is to be implemented by energy suppliers and monitored using a smart meter, so only customers with smart meters will be able to take part.

The ESO says it needs half-hourly data from households to run the scheme, but if your supplier can figure out a different way to get data on your use every half an hour then you might still be able to sign up. How the money is paid will depend on the supplier. Some may issue vouchers, others might return cash to you, and many will likely just cut the amount from your energy bill

Without the scheme, there could be cold and still days creating high demand and low levels of wind power, meaning there may be a need to interrupt supply to some customers for limited periods, National Grid ESO’s winter outlook said.

The ESO also warned that if there is not enough gas to keep the country’s power stations going in January it could force distributors to cut off electricity to households and businesses for three-hour blocks during the day.

National Grid boss John Pettigrew said blackouts would have to be imposed in the “deepest darkest evenings” in January and February if electricity generators did not have enough gas to meet demand, particularly if there is a bout of cold weather.

Pettigrew has told households to prepare for blackouts between 4pm and 7pm on weekdays during “really, really cold” days in January and February if gas imports are reduced.

The National Grid boss said he is confident this will not be the case, but added: “In the context of the terrible things that are going on in Ukraine and the consequences of that [it was] right that we set out what some of the potential risks could be."

Any plans for scheduled power cuts will need to be approved by the government and King Charles before it could come into fruition.

Which suppliers have signed up?

The “vast majority” of the UK’s energy suppliers have now signed up to the scheme to help avoid blackouts this winter, Pettigrew said, and this is expected to “continue to grow as we move through the winter”. The following energy suppliers are all taking part in the ESO Demand Flexibility Service:

  • British Gas
  • CarbonLaces
  • Conrad Energy
  • CUB (UK) Ltd
  • Drax
  • ENGIE Power Limited
  • E.ON Next
  • Equitwatt
  • Flextricity
  • Grid Beyond
  • Gridimp
  • Hugo Energy App (via SMS)
  • Labrador (via Perse Technology Ltd)
  • (via SMS)
  • myenergi (via Orange Power
  • Oaktree Power
  • Octopus Energy
  • Pearlstone Energy
  • Power Rewards App (via Orange Power
  • Shell Energy Retail (via SMS)
  • SMS
  • VpowerU
  • Zenobe Energy Limited

Pettigrew said the programme could help take pressure off the grid this winter, but also holds the key to how electricity might be used by homes in the decades ahead. In future, experts hope that most households with electric cars will plug in when they get home, but that their smart meter will wait until electricity is most abundant – and therefore cheaper – on the grid before charging the car.

He added: “In my mind it’s a little bit of a glimpse of the future. Because, with smart meters, customers can interact and provide services to networks that they’ve not been able to do in the past.

“So, for me, although it’s something that’s a useful insurance policy for this winter for the system operator, it’s actually quite exciting and it’s actually developing products and services that I think will be the norm going forward.

Asked about the risk of blackouts this winter, Pettigrew said that little had changed in the month since National Grid published its outlook which said the risk is small.