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Energy demand since lock down: how to get the cheapest energy

Posted by Caitlin Latimer on 4 June 2020 at 3:47 pm

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/

Sources

https://www.nationalgrideso.com/news/what-does-lockdown-mean-electricity-great-britain

https://www.theguardian.com/business/2020/apr/16/low-demand-for-power-causes-problems-for-national-grid

https://www.ft.com/content/54cc33d2-82ab-43c7-8ff8-235278d3858a

https://octopus.energy/blog/social-distancing-renewable-energy-negative-pricing/

https://octopus.energy/agile/

 

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Interesting article, as we live in interesting times now! COVID-19 is changing the way we think about and use energy, and I must say, in amongst the chaos and terrible trauma that so many are experiencing, we must be at least be aware of the importance of this wake up call. The shift in perspective when it comes to our energy use and our effect on the planet in general is notable.

Myself and my husband have been retired for quite some time now, so we can be flexible with our energy use. Some time ago we installed panels under the advice of one of my granddaughters. We have a couple of great local companies here in Dorset where we used to live, and Portsmouth. As you point out, this is a highly relavant criteria to taking advantage of the off-peak tariff. I do wonder in the scenario that everybody was using renewables, how differently the UK would look in terms of energy pricing and efficiency.

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JesicaComment left on: 26 August 2020 at 1:36 pm

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peland

pelandComment left on: 8 June 2020 at 5:32 pm

Hi Nick,

Not sure what you want to know about smart meters, they log your energy use every half hour (only visible to you and the supplier) so you get detailed bills and can see how to optimise your energy use to be as cheap and low carbon as possible - the OctopusWatch app makes this easier. Some people don't like the fact that they use a system similar to wireless to communicate with the supplier. If you're thinking of getting microgeneration (whichever kind), check out https://octopus.energy/outgoing/

Cheers, Peter

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NickM

NickMComment left on: 8 June 2020 at 9:08 am

Hi!

I have been on the fence for a while now trying to decide between Solar Power and Win Power. That is between installing a wind turbine of my field or solar panels on my roof. However the Octopus deal seems very enticing. Could you please also elaborate on the smart meter? I have some big decisions ahead of me and I would like to get as much information as possible.

Thank you.


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peland

pelandComment left on: 7 June 2020 at 10:57 am

Nice article! What you didn't mention is that if you join through a referrer link, both you and the referrer get a £50 bonus - my link is

https://share.octopus.energy/free-wren-317

If you use this link, I'll donate half my bonus to the Centre for Alternative Technology, which like many organisations are feeling the lockdown pinch.

Another consideration is that to operate Agile properly you'll need a smart meter, which some people don't like (I'm a fan myself). However, Octopus's standard tariff is cheaper than the big 6, Good Energy etc, and https://octopus.energy/agile/#what-does-it-cost shows that Agile is cheaper than their standard tariff even without a smart meter - it's a no brainer!

I switched to Octopus from Good Energy a few months ago, and I've never looked back. GE and Ecotricity have their hearts in the right place, but they're not innovating nearly enough - Octopus leave them standing! On a more mundane level, they're much cheaper and they consistently win awards for their customer service. I can't keep up with the rate of innovation, here are a few highlights I've noticed in the past few months:

https://octopus.energy/outgoing/

https://www.octopusev.com/powerloop

https://octopus.energy/blog/flir-thermal-cameras/

https://octopus.energy/blog/tepeo/ https://octopus.energy/blog/ncube-smart-home/ https://octopus.energy/blog/powervault/  

 

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