National Grid PLC (LSE:NG.) and Octopus Energy are piloting a scheme that will pay customers to reduce their power consumption at peak demand times during the day.
The aim is to determine if reducing peak time home energy demand can support the electricity system this winter and improve the balance of supply and demand on the grid, National Grid Electricity System Operator (ESO) and Octopus Energy said in a statement.
The two-month trial, which will begin this week and be available to Octopus Energy’s 1.4 million smart meter customers, will pay households if they reduce their power consumption below their usual levels for specific periods when demand is high, for example between 9am-11am and 4.30pm-6.30pm.
Participating homes could reduce power demand by 150MW during each two-hour trial event and if they meet their targets they would get free electricity during the trial event, earning up to 35p for every kilowatt-hour of electricity saved.
National Grid said the pilot scheme will help inform the ESO’s plans to run a zero-carbon grid for certain periods by 2025 and a fully decarbonised grid by 2035 and build understanding of how households can support this goal.
Electricity consumption is set to soar in the future as people swap to electric cars and electric heat pumps, as part of the government’s goal to reduce carbon emissions.
If people charge their cars at night and run appliances such as washing machines while they are at work, this will help reduce peaks and spread out power demand.
Isabelle Haigh, head of National Control at National Grid ESO, said: “Encouraging households to engage in exciting climate-friendly energy opportunities like this trial will be crucial in our transition to net zero.
“System flexibility is vital to help manage and reduce peak electricity demand and keep Britain’s electricity flowing securely.”
James Eddison, chief technology officer and co-founder of Octopus Energy, added: “The findings of our previous home energy trials and the demand for our smart tariffs show that homes can play a key role in improving grid stability and making sure that we’re making the most of home-grown green energy when it’s abundant.
“By joining forces with ESO, we’re now taking this research to the next level, inviting 1.4 million customers to take part in a trial that will allow them to potentially benefit from cheaper, greener power and help build the energy system of the future.”