Lockdown is having a strange effect on energy usage in the UK. You may have noticed a rise in your energy bills due to staying home more, however the opposite is happening on a wider scale. Electricity use across the country is significantly lower than it should be at this time of year, due to businesses and industries being forced to shut down. Since lockdown began in March the daily demand for energy has dropped by up to 20%.
You may expect our national grid to welcome a reduced demand on the system, however there are still challenges associated with a lower demand for energy. The grid needs to ensure that the input of energy into the system will match the demand so they can balance each other out. Due to the recent good weather there has been a much higher proportion of renewable energy feeding into the grid, so not only do we have a much lower demand of energy, but we’ve also been generating more energy due to the sunny and windy weather.
The result of this is an increased risk in local energy grids being overloaded and of the grid being more vulnerable to sudden changes: both of which can lead to temporary blackouts. The grid was designed around large fossil fuel plants that maintain a more consistent supply of energy which help keep the system stable, whereas renewable sources are more unpredictable and variable as, for example, wind and solar are dependent on the weather.
To avoid overwhelming the grid, certain measures will be put in place such as paying ‘flexible’ energy generators (renewables sources like windfarms) to switch off at short notice as well as restricting electricity imports from Europe. ‘Inflexible’ power generators, such as nuclear reactors, could take hours to shut down safely to reduce the energy supply.
So if there’s lots of renewable energy being generated during the day, it makes sense to use energy at this time to help balance out the extra supply. But how can it benefit me?
Some people are taking advantage of this through a unique energy tariff which is actually rewarding customers for using energy at certain times of the day. Offered by Octopus Energy, the Agile Octopus tariff offers half-hourly energy prices which is linked to wholesale rates. This means that your energy prices reflect the wholesale rates and how it fluctuates throughout the day, so if you are savvy with your energy usage you could benefit from low unit rates at certain times of the day (or at night).
According to their website, over the last 12 months unit prices dropped below 2p / kWh 31 times. But if you are lucky enough to be in the situation where there is a surge in renewable energy generation and low enough demand, the wholesale price could be negative and you actually get paid to use electricity. For example, on the 5th April thousands of customers on this tariff were paid to use power between 10:30am – 4pm. In this situation, alerts are sent to customers when the price drops below 0 to help them take full advantage of being paid to use electricity.
This type of tariff is an incredible way to encourage more energy usage outside the peak times – which is typically between 4pm-7pm. This will result in less energy being generated by fossil fuels to help meet extra energy demand, because using appliances during the day means you won’t be turning them on after work during peak time with everyone else. Since being in lockdown it’s been easier than ever for us to turn on appliances at any time during the day to take advantage of this.
While I praise this truly innovative tariff, it will only really suit those who can be flexible with their usage. If you can’t take advantage of cheaper day (or night) rates you may be forced to pay more for energy due to the flexible pricing following wholesale rates which can soar during peak times. However it’s important to note that the Agile tariff does have a cap so that customers will never pay more than 35p /kWh when prices surge.
You can learn more about the tariff by following this link: https://octopus.energy/agile/
If you have a question about anything in the above blog, please ask it in the comments section below.