National Grid will pay customers to not use electricity

Recently, National Grid announced that it will be launching a new scheme that will pay households with smart meters to reduce power usage during peak times in the winter. What challenges does peak energy present, how could the scheme operate, and why will this finally make smart meters smart?

What challenges does peak energy present?

Maintaining the stability of the electric grid is no small feat; the exact amount of power being generated by all connected power stations must match the total demand; otherwise, any imbalance causes a shift in the output frequency of generators which in turn changes the frequency of the grid. The grid has been designed to operate on a very specific 50HHz frequency with very little room for error, and changes in this frequency can damage transformers, see significant losses in transmission lines, and even damage equipment connected to the mains.

To maintain this balance, power stations and grid operators must work in real-time to ensure that the energy generated matches the demand. But not all power sources are equal, and not all can respond to sudden changes. For example, nuclear energy is excellent at providing bulk power for long periods as it is incredibly stable, but this stability means that the power output of a nuclear reactor cannot be changed over short periods of time.

Gas power, however, is the opposite in that it is very easy to cycle the output power over short periods to meet rises and falls in demand. However, trying to rely 100% on gas is challenging due to the need to source fuel and dependency on market rates (Uranium fuel is by far cheaper). As such, electricity generation is always diversified across different energy sources, with nuclear providing the base amount of energy and gas topping up the instantaneous demand.

The need for a stable energy supply that can always meet demand is why renewable energies are troublesome. Renewable energy sources, such as solar and wind, are extremely unreliable as renewable sources generate energy whenever available instead of generating energy when needed. Combined with the inability to store energy, the result is that renewable energies are typically unable to meet peak demand. 

If the demand on the grid becomes too great, grid operators may have to resort to disconnecting energy to non-prioritised zones such as domestic and industrial networks while ensuring that hospitals and essential services still have power. Sudden spikes in demand can also cause brownouts whereby the voltage from the mains sees a significant disruption that can cause machines to glitch and/or fail.

Finally, National Grid to launch a new scheme that pays customers not to use energy

In what can only be described as a great relief, National Grid has finally recognised the challenges of peak energy and will be launching a new scheme to encourage reducing energy usage. Additionally, this new scheme will also see smart meters finally become smart in that they will be able to respond to changes in energy prices in real-time and help homes save money on bills.

The restricted gas supplies and skyrocketing fuel prices due to the Russo-Ukraine war are seeing grid operators worrying about winter fuel reserves and energy demand. If too many customers try to use energy simultaneously, this will likely cause brownouts across the country, and rising electrical prices will also push bills up extortionately while further risking the collapse of multiple energy providers.

National Grid will be deploying a new scheme whereby customers are paid energy credits for not using energy during peak times. By connecting smart meters to the grid, customers can be given advanced notice of when peak energy demand is expected, and this will allow customers to reduce their energy usage. This scheme will allow for brownouts to be avoided while also shifting demand to times when energy generation is at its cheapest.

Interestingly, National Grid suspected that during their first trial (in conjunction with Octopus Energy), customers would not take note of the changes in prices but were surprised when customers did indeed change their spending habits. On average, customers saved 23p in each two-hour power period, saving as much as £4.35. When extrapolated across the entire year, customers could save themselves around £100 a year on energy.

Furthermore, National Grid will be considering energy credits worth up to £6 per kilowatt of energy not used instead of paying the standard 28p per kilowatt-hour. If this incentive is used, it demonstrates just how expensive it is to try and balance out power during peak times.

Why will this scheme finally make smart meters smart?

Anyone who follows my work knows my hatred for smart meters and anything that claims to be smart. The term smart is always thrown around as an advertising buzzword, and engineers will generally affix the word smart to anything internet-connected. 

In truth, something is said to be smart when it can respond to real-time data produced by other sensors, stimuli, and devices to create intelligent responses. For example, a thermostat controls air conditioning and heating systems by measuring the ambient temperature, but a smart thermostat would anticipate room use and analyse behavioural patterns to determine the best time to control heating systems.

The same applies to smart meters; just because a smart meter connects to the internet does not make it smart. Instead, a true smart meter would receive real-time prices from National Grid and then signal this data to domestic devices to determine the most economical time to operate. This new scheme from National Grid finally helps to bring about true smart meters that can indeed react to real-time price changes, and it won’t be long before engineers create devices that can control energy usage in the home to save energy.