Octopus Energy calls on the National Energy System Operator (NESO) to strengthen the role of households in managing grid constraints, reducing the need to turn on expensive and polluting fossil fuel plants.
This plea comes after the system chose to pay over £17 million to two fossil fuel power plants for backup power amid a cold weather snap yesterday, instead of calling on the significantly cheaper Demand Flexibility Service (DFS).
The gas stations received payments of up to £5,750 per MWh of power generated between midday and 7pm. In stark contrast, households participating in Octopus’ demand flexibility scheme ‘Saving Sessions’ during the same timeframe were offered just £900 per MWh – over six times less.
Demand flexibility schemes such as ‘Saving Sessions’ allow customers to get paid for shifting their energy use out of times of peak demand, helping to balance the grid.
The £17 million paid to gas peakers yesterday was £5 million more than the total amount given to households through the DFS across the whole of 2024.
Last winter, customers received an average of £2,850 per MWh shifted. However, the drastic reduction in payments this winter has resulted in a 50% drop in household participation.
By increasing the rate offered to households, more customers would be encouraged to take part in the scheme, dramatically lowering balancing costs that are paid for by all billpayers.
Greg Jackson, Founder of Octopus Energy, said: “What happened yesterday is another example of our malfunctioning energy system. Millions of pounds were added to bills in just a few hours to pay a handful of gas power plants for a modest amount of electricity.
“It’d have been far cheaper to pay customers who chose to use a bit less instead. This was incredibly successful last year, but has been crippled by bureaucratic wrangling. Yesterday shows we need to redouble efforts to make the system work for customers, not against them.”
