Octopus Energy has launched a time of use tariff that will pay customers to use electricity when there is too much power on the UK system.
At times of low demand, for example in spring and summer when around 12GW of solar is generating, or overnight at times of high wind, power prices can fall into negative territory due to over supply and generators can be paid to stop exporting power – simply because there is nowhere for it to go.
That is one of the reasons National Grid is looking at how to bring households and EVs into its flexibility programmes.
Octopus says its Agile tariff will pass on negative prices to customers by paying them to help balance the system. The firm will inform customers of a ‘price plunge’ event via text, email or online and give them a full half hourly breakdown of pricing and usage each month.
While Octopus is a domestic supplier, founder and CEO Greg Jackson indicated the firm is open to non-domestic customers taking on the tariff.
“If any businesses would like to sign up too we’d love to hear from them,” said Jackson.
“By reflecting the real cost of energy on the grid every half hour, customers can capitalise on times when prices are especially low. If the wholesale price goes below 0p/kWh, Octopus Agile will actually pay customers to take the unwanted energy from the grid. As renewable energy production grows these events are only going to become more frequent.”
The firm will publish half hourly power prices at 4pm for the following 24 hours, tied to wholesale costs, with customer charges based on half hourly consumption data from a smart meter.
Octopus says forward pricing will enable customers to schedule thing like electric vehicle charging at times of lowest cost, which may vary due to supply and demand on the power system.
It claims smart charging using the tariff could save EV owners hundred of pounds a year versus ‘dumb’ charging.
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“At times of low demand, for example in spring and summer when around 12GW of solar is generating …”
Our 12GW of solar has never actually generated 12GWh during a 1-hour period, has it?
‘Peak’ solar generation lasts just a couple of hours on a very sunny day.
Disingenuous to fail to mention relative price during our month of peak demand when that 12GW of solar operates at a pathetic ~2% capacity factor.
In addition, there’s the very real prospect of a winter lull lasting an entire week or more, when 17GW of turbines operate at ~10% capacity factor.
To paraphrase Greg Jackson “By reflecting the real cost of energy on the grid every half hour, Octopus can capitalise on times when prices are extremely high.”
Agree with Joe Public. Plus the fact that the system price will actually have to go somewhere below -£55 to cover the non-energy costs before you could even think about ‘paying customers to use energy’. Also dependent on smart meters, and as an existing Octopus customer, who can’t read the smart meter I inherited from Eon yet, I feel they have some way to go. All that being said, Time of Use tariffs is the way forward, and good for them for publicising the issue, for all it looks a bit gimmicky at the moment