Households with smart meters could get discounted energy bills for cutting peak-time use

Households with smart meters may soon be able to get cheaper energy bills by cutting back on electricity use at peak times, thanks to a trial launched by National Grid today in an effort to ease demand on the grid this winter.

Energy suppliers taking part in the initiative will ask customers to cut their usage for one hour in 12 separate test sessions between November 2022 and March 2023.

National Grid claimed the scheme, known as the Demand Flexibility Service, could save households up to £100 on their energy bills.

However, only homes that have smart meters will be able to take part. That's around 14 million homes in England, Scotland and Wales - less than half of households.

Find out how the scheme will work, how you can sign up and which suppliers have confirmed they're taking part so far.

Get help with your household bills with our latest cost of living advice and tips

Demand Flexibility Service – how will it work?

National Grid will offer customers discounts on their electricity bills for cutting peak-time use on a handful of days over the winter.

Households taking part will get 24 hours' notice of a test day. On these days, they'll be asked to reduce their peak-time electricity use, if they can, during a one-hour period identified by National Grid. This is likely to be somewhere between typical peak hours 4pm and 7pm.

If you do take part, you’ll be paid £3 per kWh for avoiding activities that are energy hungry, such using the oven or running a washing machine or tumble dryer during peak times. 

It will be up to suppliers how they pay you, but options include adding credit to energy accounts or allowing people to withdraw the cash.

National Grid said the service had been approved by the energy regulator Ofgem, which means electricity providers can sign up to it and advertise it to their customers.

Jake Rigg, director of corporate affairs at National Grid ESO, said: ‘We can all do our little bit, we can shift demand out of that peak and help maintain security of supply throughout the winter.’

Rocio Concha, Which? Director of Policy and Advocacy, said: 

‘These latest measures to cut peak-time use could be a good way for people to save money during the cost of living crisis, but many consumers will miss out if they don't have smart meters. 

‘The government, energy firms and regulators should work together to prioritise the rollout of smart meters where appropriate to lower income households, so those most in need of help can benefit from schemes like this.’

Read more about our cost of living campaign

Why the Demand Flexibility Service is being introduced

The UK is heavily reliant on gas to produce electricity, with gas-fired power stations generating more than 40% of the country's electricity. With the current volatility in energy markets, National Grid is looking at ways to reduce demand and ease pressure on the grid over the winter months, as an insurance policy.

It's understood that many of the UK's large energy suppliers are looking to take part in the trial. 

Octopus Energy participated in a previous pilot of the service with 100,000 of its customers in February. During this tryout, Octopus added credit to the energy accounts of customers who took part. It also had a ‘self-refund option’, which meant people could also transfer saved credit back to their bank account.

How to sign up for the Demand Flexibility energy bill discounts scheme

National Grid says that if you have a smart meter and your supplier is signed up to the scheme, you should look out for an email inviting you to join.

Energy suppliers who have signed up so far include:

• British Gas
• Eon Next
• Octopus Energy
• OVO energy
• Utilita.

Rules may differ by supplier as to how you qualify for the discounts. We'll add more details as we get them, and you can find out more about the scheme on the National Grid Demand Flexibility Service minisite.

Find out what help is available if you're struggling to pay your energy bills

Other ways to save on your energy bills

If you aren't eligible for the scheme, or are looking to save wherever possible, there are other steps you can take to reduce your energy payments:

• Insulating your home goes a long way to help you make savings. Buying foam insulation to fit around exposed hot water pipes will cost around £15, according to estimates from the Energy Saving Trust (based on a three-bedroom semi-detached property in September 2022), and doing this will typically cut your annual energy bills by £9 a year (alongside 18kg of CO2).
• Draught-proofing can also help. Stopping heat from escaping through unwanted gaps around doors and windows could help you save around £60 a year in a typical home, according to the Energy Saving Trust. If you have an open chimney, draught-proofing it when it's not in use could save a further £90 a year. These savings are based on a typical gas-fuelled, semi-detached home.

Also ensure you get any discounts you’re eligible for. The Energy Bill Support Scheme is a £400 discount on electricity bills, and you don’t need to do anything to receive it unless you’re a traditional (non-smart) prepayment meter customer. 

If this is the case, you’ll get the discount from the first week of each month as redeemable vouchers, sent by SMS text, email or post, or as an automatic credit when you top up at your usual top-up point. Your electricity supplier should let you know how you will get your discount.

Find out more ways to cut your energy bills