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

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Households across the UK could get money off their energy bills on Monday if they reduce their electricity usage at certain times of the day.

The National Grid ESO (electricity system operator) is, for the first time, activating a live “demand flexibility service”, which rewards households for using electricity during off-peak hours.

The scheme allows the grid to access additional flexibility when national demand is at its highest during peak winter days. It is due to stay in place until March, with 26 energy suppliers including Octopus Energy and EDF signed up to it, but up until now it has only been used in tests.

The scheme is administered by energy suppliers and households have to register their interest in taking part in advance. 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 some households with smart meters will be entitled to discounts if they cut their electricity use between 5pm and 6pm today (23 January).

National Grid ESO said the launch of the live scheme should not be interpreted as a sign that electricity supplies are at risk and said “people should not be worried”.

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

How much money could households save?

National Grid announced an increase to the amount it will pay households for using electricity during off-peak hours at the end of last year, 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.”

National Grid advises households to check if their supplier is one of the 26 that has signed up to the scheme. If this is the case, you should receive a notification that it starts today.

Households in England, Scotland and Wales that have a smart meter are eligible. Customers will receive a discount if they reduce their electricity use between the times set by National Grid. On Monday, the scheme will run between 5pm and 6pm.

Households can do this by avoiding using running washing machines later at night, or charging electric cars away from times of high demand. The amount of money saved will depend on the amount of energy used.

National Grid says savings can range from a few pounds to as much as £20 depending on the amount of energy used.

Do households need a smart meter to take part?

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 previously 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?

A total of 26 UK energy suppliers have signed up to the scheme to reduce pressure on the grid this winter. The following suppliers are all taking part:

  • British Gas
  • CarbonLaces
  • Conrad Energy
  • CUB (UK) Ltd
  • Drax
  • EDF
  • 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
  • OVO Energy
  • Pearlstone Energy
  • Power Rewards App (via Orange Power
  • Shell Energy Retail (via SMS)
  • SMS
  • VpowerU
  • Zenobe Energy Limited