National Grid to Scrap Energy Saving Incentive

As the UK braces for a cold winter with high energy costs and potentially limited gas supplies, National Grid has recently announced that it will not be deploying its scheme that would see people paid for using less energy. Why is the UK suffering energy challenges, why has the National Grid stepped back from its plan, and why is this a failure for National Grid?

What is causing the current energy crises?

Energy prices in the UK have never been as high as they are today, and these increased prices in combination with soaring inflation are forcing many to make difficult decisions on whether to heat their homes or not. Fortunately, November has been unusually mild in the UK with temperatures as high as 20˚C being recorded, and this milder climate has reduced the need for heating (this November, I only put the heating on once to check that it was working and that none of the radiators had seized). Now that winter is just around the corner, it is very possible for temperatures to rapidly drop, and this sudden drop will see a surge in demand for gas. 

But exactly what has caused energy prices to skyrocket, and is there one sole contributing factor? Many will be quick to point fingers at the Russo-Ukraine war that has seen most turn their backs to Russian energy. Now, while this is certainly a major factor in the increased gas prices, it isn’t the sole cause. In fact, it is possible that steadily rising prices in gas prior to 2022 is what triggered the Russian invasion (historically, every time oil prices shoot up, Russia attacks something).

However, the Russian invasion isn’t the only cause of the increases in energy prices, and many other contributing factors are, in fact, self-inflicted. One such factor is the numerous COVID lockdowns that disrupted the world economy. The effects of the pandemic are still widespread, and rising inflation as a result of massive borrowing combined with the rising cost of living is helping to push energy prices higher.

Another factor is that Europe (including the UK) have had an unhealthy reliance on Russian-derived fuels since the fall of the Soviet Union. Instead of working to establish nuclear plants and efficient carbon capture technologies at coal plants, many governments have worked towards wind and solar which have a better public image. However, these energy sources are far from ideal, and their inability to produce clean reliable energy now sees most of Europe heavily dependent on gas. 

There are numerous other factors, but it can be seen that the sheer complexity of the global economy makes it difficult to point fingers at any one person or nation. Sure, OPEC could increase its gas output, so could the US, and maybe the UK should bring in fracking to reduce the price of gas, but overall, everything is connected so trying to find blame is arguably pointless.

National Grid to pull energy plan

Despite the numerous challenges faced by UK consumers, National Grid has announced that it will not be deploying its new scheme that would pay customers for reducing energy usage during peak times. When energy companies detect low stores of energy reserves, the National Grid is automatically warned, and this in turn can trigger plans such as strategic blackouts and notices to customers. But while the National Grid recently received a warning regarding gas prices and current levels of reserve gas, National Grid has decided not to introduce the new energy scheme, claiming that it was confident in its ability to provide grid stability. Additional warnings also came in from the lack of wind energy being generated, and the potential reduction of power from French suppliers (who derive most of their energy from nuclear sources).

If the scheme was made live, those with smart meters would be able to have a direct communication link to National Grid that could warn users when to power down. If connected users do indeed reduce their power output, their bills would not only be significantly reduced but can even earn money that can go on to pay for future bill usage. Such a scheme would have made smart meters truly smart in that they can react to real-time changes in grid usage to provide consumers with the best possible prices.

At the same time, the ability to reduce grid usage would allow National Grid to avoid the use of quick start-up generators that are highly inefficient, minimise the use of natural gas plants, and maximise the use of wind energy (the UK's primary source of renewable energy). In fact, such a scheme could potentially allow for nuclear plants to increase their power output to provide more bulk energy which not only reduces the amount of gas needed but reduce the price of electricity.

Is this a failure for National Grid?

Even though National Grid believes that it has the ability to provide stability, the scheme could have been rolled out to over 14 million homes that currently have smart meters. If launched, the scheme would have demonstrated for the first time how large-scale IoT devices can be used to reduce energy consumption while improving efficiency and reducing CO2 emissions. Furthermore, the scheme has the potential to add additional security, something that doesn’t do any harm to implement. 

It is perfectly possible that over the course of the winter, undersea gas pipelines find themselves mysteriously damaged, and countries that are now pumping gas to make up for the loss of Russian gas could come under threat from Russia. In fact, some Nordic countries have noticed drones flying over critical infrastructures such as oil refineries and pumping stations, and if these targets are indeed hit, could spell disaster for UK energy security. 

Overall, National Grid not bringing in the scheme is a failure for National Grid as it would have been the perfect opportunity to finally roll out smart technologies into homes across the UK. Energy bills could be significantly reduced, the rising cost of living would be easier to cope with, and the UK could increase its energy security.