The UK's Push to Cut Energy Use Is Focused On Four Hours a Day

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(Bloomberg) — To understand the challenge energy operators are facing, it helps to picture the World Cup. During England’s Dec. 4 victory over Senegal, spikes in UK electricity demand could be seen immediately before the game, at halftime and after the final whistle — an entire nation of spectators simultaneously prepping a cup of tea or opening the fridge for a beer. 

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In the UK, where an energy crunch sparked by Russia’s invasion of Ukraine is exacerbating anxiety about power supply, utilities are likewise zeroing in on the “final whistle” of the average person’s day: roughly 4 p.m. to 8 p.m., when a mass return home from work and school means the firing up of millions of ovens, washing machines, TVs and chargers. National Grid ESO, which operates the country’s electricity network, is working with utilities to double down on initiatives that pay consumers to use less power in the evening, part of a wider effort to flatten high-power peaks and avoid the need to generate extra gas or coal supply. 

So-called demand response programs are not new: Utilities have spent years trying to incentivize behaviors that smooth out pressure on the grid. This year, though, Brits’ electricity bills are up 100% over 2021, leaving millions in fuel poverty. With households hyper-aware of how much power they’re using and how much it costs, energy operators see an opportune moment to test the efficacy of handing out cash in exchange for less consumption. 

Businesses and consumers that take part in the current program, which includes 12 “saving sessions” and runs through March, have their electricity use measured during a specified hour-long period between 4 p.m. and 8 p.m. That number is compared to their energy use during that same period averaged over the past 10 working days, excluding any other days when they’ve been incentivized. They are offered around £3 ($3.65) for every kilowatt hour of reduction.

Participating utilities offer the incentives to their customers, who must have smart meters that can communicate household electricity use every half-hour. Octopus, the utility that pioneered the program and has 200,000 customers participating, is also “gamifying” the offer with rewards for top savers and for streaks, i.e. opting in for multiple sessions. On Twitter, participants can be seen sharing photos of trips to the gym, candlelit glasses of wine, and evening walks — all ways to avoid using energy at home. 

Sarah Chambers, 51, who homeschools her three children at their house in Bridgend, Wales, is one such participant. To take advantage of cheaper energy, she switched up some household chores and even pushed back family dinner. “I said it’s something we have to do to try and reduce our demand and help the National Grid, and we were going to eat later,” she says. “[The kids] just came on board with it.”

National Grid ESO says someone participating in all 12 saving sessions could in theory save £100 — though this works out to about £8.30 per session, which would be significantly higher than participants have managed thus far. In the program’s first session, which took place from 5 p.m. to 6 p.m. on Nov. 16, the top 5% of Octopus’s participants saved an average of £4.27. Energy-wise, the session saved 108 megawatts, equivalent to the output of a natural gas power station in one hour. 

Peak demand in Britain has actually declined since the early 2000s — a combination of deindustrialization and greater efficiency — and the UK doesn’t really have a capacity problem. The challenge is making energy available when it’s needed. The country is the second-biggest market for offshore wind in the world, but windless winter days present a challenge that battery storage is not yet cost-effective, widespread or efficient enough to solve. The disconnect will grow more acute as gas boilers make way for electric heat pumps, electric cars replace petrol and diesel, and the grid’s reliance on renewable energy grows.

“The additional capacity over the last 15 years has just about all been renewables,” says Tom Haddon, an analyst at consultancy Arcadis. “That’s fine, but you can’t choose when it generates. So even though there is huge capacity on the transmission system, it means that sometimes we get a bit too close for comfort when the wind isn’t blowing.”

The UK is far from alone in trying to shape the contours of consumers’ power use. Utilities in the US, Sweden, Italy, Japan and elsewhere are also experimenting with demand response programs. One initiative in New York, California and Texas offered customers rewards like Peloton bikes, $3,500 Costco gift cards and invitations to Major League Baseball games. And in September, a text message from the California Independent System Operator — “Do your part to save energy from 4-9pm” — even helped avert a blackout during a record-breaking heat wave. Longer term, utilities are expected to offer rebates to customers who supply the grid during times of high demand. 

Although the UK’s project is still in the testing phase, experts say even the trial runs are critical to informing future tactics. “[Are] there a million households that will respond to price signals? [Are] there 10 households that will respond to price signals? Frankly no-one really knows,” Haddon says. “That’s what these tests are telling us.”

And while cash is a good motivator, the pull to help with a solution can also be effective. In Germany, the energy crunch has led to a nationwide embrace of creative ways to curtail consumption. 

“Money provides an incentive,” says Adam Bell, head of policy at consultancy Stonehaven and former head of energy strategy at the UK Department for Business, Energy and Industrial Strategy. “But how you feel about your role in society does too, and combining those is the most effective route.”