New analysis from researchers at Cornwall Insight and Smart Energy GB has revealed the substantial cost-saving potential of household flexible electricity initiatives such as time-of-use tariffs, smart meters, solar PV, and batteries.

The data reveals that, if flexible energy solutions are implemented, national wholesale and system electricity costs could be cut by an annual £4.6 billion in 2030 and £14.1 billion in 2040.

Households that participate in flexible electricity initiatives also stand to cut wholesale electricity costs by more than 14% in 2030 and a staggering 52% in 2040 – a predicted annual saving of £115 and £375 respectively for an average household.

The potential savings for households will be welcome news prior to the new price cap announcement on Friday 25th August. These are expected to show the cap remaining significantly above pre-2022 levels, with experts saying no respite is expected before the end of the decade and likely far beyond.

Typically, daily peaks in electricity demand occur in Britain on weekdays between 4pm and 7pm. To meet peak demand, additional fossil fuel-generated electricity is often required.

As these sources are more expensive than renewable options such as wind and solar, this drives up wholesale electricity costs and ultimately impacts consumer bills. With the anticipated increase in electricity demand over the next few years, this issue is poised to become even more acute.

Encouraging consumers to modify their electricity usage according to the availability or price of electricity, by, for example, installing smart meters so they can access time-of-use tariffs, and participate in trials like the National Grid ESO Demand Flexibility Scheme will boost off-peak energy usage, saving money and taking pressure off the grid.

Additionally, the report calculates that customers who adopt self-generation and energy storage for use during high-cost periods, stand to save hundreds of pounds from their annual energy bills. Even households that do not actively participate in household flexibility will see an overall reduction in their electricity bill as a result of a more efficient system.

The benefits would also be felt on a national scale; with the modelling showing that by embracing flexible electricity usage GB could avoid the need to construct the equivalent of four additional gas-fired power stations in 2030. This not only translates to cost-savings of over £2.5 billion but also provides significant environmental benefits for our communities. It would also reduce the need for upgrades to the electricity wires and infrastructure, which saves almost £1bn in 2030.

Figure 1: National & consumer savings under the flexibility scenario

Source: Cornwall Insight

​​​​Figure 2: Overview of total savings under the flexibility scenario, £bn

Source: Cornwall Insight
Anna Moss, Senior Consultant at Cornwall Insight said: “Our analysis has unveiled the immense potential of flexible household electricity use to support GB as it journeys towards a renewables-based system. By empowering consumers to become the architects of their own energy usage as well as supporting home decarbonisation technologies across the consumer base, the government can reduce expenses, alleviate strain on the grid, and even eliminate the need for additional costly gas-fired power stations.

“This is a defining moment in our energy journey. Britain is moving along the path to a more electrified future, where household engagement with flexibility will enable us to reach net zero at lower cost, allowing consumers to realise the financial benefits associated.

“Smart meters play a pivotal role in this transition, providing crucial data and insights that empower consumers to optimise their energy use.

“By embracing household flexibility, we not only revolutionise our electricity landscape but also rejuvenate our commitment to a greener, more sustainable future.”

Sara Higham, Director at Smart Energy GB said: “The debate on how we can meet the country’s growing demands for electricity often focuses on how we create more national infrastructure to generate more energy to meet demand, but this report clearly shows that there is another side to this debate: enabling and incentivising consumers to use the energy we generate in a more flexible way.

“This report clearly demonstrates the benefits of flexible energy use and the pivotal role played by smart meters in creating a flexible energy system. More than half of GB households now have a smart meter and the benefits to individuals and the country as a whole will only increase as installations continue.”

The full report can be read here.

​​In modelling the costs, the report makes assumptions about the future energy system. At the highest level, it assumed current policy aims continue, including:

  • Achieving net zero emissions by 2050
  • Decarbonising electricity by 2035

The report developed two scenarios to compare the benefits of enabling households to participate in a flexible energy system. In each scenario the report assumed a credible level of flexible technology uptake by households based on a current market view.

Flexibility Scenario – where customers take up smart technologies and Time of Use tariffs in line with the customer segments described above, and the energy demand associated with these can be used flexibly to support system needs and reduce customer costs.

No Flexibility Scenario – where customers take up technologies to meet net zero obligations (e.g. transitioning to EVs and heat pumps), but do not engage with flexibility opportunities and consumption patterns see limited change. We assume consumers in the No Flexibility scenario do not take up batteries, as these are primary used to access the benefits of flexibility.


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