UK could save £1bn by paying people to change electricity use

Paying customers is cheaper than building new capacity, says study
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The UK could save about £1bn and thousands of tonnes of carbon emissions by paying people to use electricity at different times, according to a study using government figures.

The research, carried out by a company called Open Energi, which helps companies earn money by switching when they use power, suggests that a total of
3 gigawatts of electricity demand could be moved away from peak times.

One example of how it can work comes from domestic fridges, which when fitted with a digital device, can switch off for short periods without affecting the internal temperature if the grid is experiencing a surge in demand.

Shifting power usage patterns could transform UK energy policy, which is centred on trying to make sure the country has enough capacity on the system to satisfy sudden spikes in demand.

Remi Boulineau, who carried out the study, said: “Instead of building more capacity to satisfy our energy needs, we could simply displace the peak.”

Britain is suffering an energy supply crunch as old coal stations are shut down with relatively little being built to replace it.

Research by Open Energi suggests that it would be cheaper to pay customers to change when they are using the power they need than to build new capacity.

The government has already sanctioned National Grid to start doing this, but only in a limited way. It was done in an emergency situation for the first time last November.

According to the report, initial trials by the energy department suggest an eighth of the country’s peak demand could be shifted by an hour. Half of that would come from domestic use and half from companies or other heavy users.

This would equal moving 3 gigawatts of usage by two hours, enough to avoid the peak altogether. Building gas power — which the government has identified as its preferred way of meeting peak demand — costs about £700,000 per megawatt of capacity. In comparison, companies such as Open Energi say they are able to get users to switch their demand at an average cost of £350,000 per MW. The difference between the two could see the UK save £1bn.

Open Energi also calculated this would save 1,560 tonnes of carbon dioxide on an average winter weekday, helping Britain meet its climate targets.

National Grid supports trying to shift energy consumption patterns, and is pushing for the government to give it more power to pay users to move or reduce their demand.

Cordi O’Hara, the company’s director of market operations, said: “We are fully behind this shift to innovative demand-side solutions.”

One hurdle to doing so however is that it requires the widespread use of smart meters, which can communicate with the grid and sense when demand is rising or falling.

Ministers have a target of installing 53m smart meters by 2020, but so far companies have only put in 2m.

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