Using energy-hungry appliances at lowest prices off peak could cut annual energy bills by up to £200 with a 'time-of-use' tariff.
Balancing the grid
It is widely recognised that the UK faces a looming squeeze on 'energy capacity', due largely to the phasing out of coal-fired power plants by 2025 to help meet carbon reduction targets. These plants historically have played a key role in short-term balancing of electricity supply and demand. So as part of a programme of electricity market reform, other options are being promoted by the government to ensure security of supply, notably the capacity market and smart grid.
You may ask, How do these affect me, the consumer? Well, both present opportunities for households and businesses - to access new streams of revenue; to cut energy bills by 'smarter' purchasing and use of electricity, and to play an active role in a distributed energy system.
'Time shifting' to save money: 'time-of-use' tariffs
'Time shifting' is moving your daily electricity use outside times of peak demand, when the cost is highest, to other times of day when the cost is lower. Off-peak electricity has long been dominated by 'Economy 7' tariffs, which are geared primarily to charging electric storage radiators. Now some energy suppliers are offering much more flexible 'time-of-use' (TOU), or 'time-of-day' tariffs, intended to encourage consumers to buy their electricity at times of the day when demand is lowest, especially during the night, but also at certain other times of the day.
A range of price bands apply depending on the time of day, and a smart meter informs the supplier how much energy has been consumed during each tariff band, so that the consumer is charged accordingly. The smart meter also keeps the consumer informed about current and cumulative usage and costs.
The aim of such tariffs is to better balance supply and demand and reduce the strain on the national grid. This will involve not only behavioural change on the part of consumers, for example by using power-hungry appliances such as washing machines and dishwashers at off-peak times, but also storing energy where feasible. For example, charging electric vehicles off peak is vital to avoid overloading the grid with the anticipated growth in ownership.
Some form of energy storage can maximize energy saving with TOU tariffs. Batteries offer the most flexible storage system for electricity, but electrical energy can also be stored as heat, whether in storage radiators or by heating water in a hot water cylinder. The strategy is to draw electricity from the grid when it is cheap and use it when you need it, summed up as 'buy cheap/use peak'.
For example, Agile Octopus is a TOU tariff from Octopus Energy. It will even pay the consumer when the half-hourly wholesale unit price falls below zero - yes, it can happen, when there is a problem with oversupply and suppliers are paid to take energy off the grid.
Green Energy UK has a Tide tariff; this has five price bands, ranging from 6.4 pence per kilowatt hour between midnight and 7.00 am, and nearly 30 pence between 16.00 and 20.00 on weekdays.
With the Tide 'time-of-use' tariff from Green Energy UK, charging a Renault Twizy overnight will cost about one-fifth of the price of charging it at peak times during a weekday.
Payments for battery storage
In simple terms, 'capacity' is anything connected to the grid that can generate or store electricity. So, a house with solar panels serves the generation aspect of capacity, and has received a guaranteed income from the Feed-in Tariff scheme. But increasingly owners of solar PV are looking at battery storage systems to maximize their use of home-generated electricity on site instead of exporting it to the grid. This cuts energy bills still further and is more energy efficient. And some battery installers are already offering customers regular payments in return for the right to manage those batteries in support of the grid - so-called active network management.
Get paid for active network management: frequency regulation
Battery systems can contribute to 'balancing' the grid in two ways. One is the ability to store and discharge energy when needed. The other, and the one most relevant to small domestic storage systems, typically 1 to 30 kWh capacity, is frequency regulation. This is a service that maintains the frequency of the grid electricity to within 1% of the standard 50 hertz.
The National Grid tenders for operators to provide frequency regulation services. To enter the market an operator must control a minimum capacity of assets, currently 10 MW. This can be achieved by 'aggregating' a range of assets, including multiple domestic storage systems that the operator can control. For example, suppliers of the Powervault battery offer £20/month to customers in return for their system contributing to Powervault's GridFlex frequency regulation service for the grid.
How does this work in practice? In Powervault's case, their battery system incorporates frequency monitoring software that prompts appropriate cycles of charging or discharge to help stabilize the local grid frequency. This service must be available 24/7, and can involve some charging at peak times. However, Powervault assure customers that this entails "no significant drop in the batteries' capacity (e.g. at peak times), and that GridFlex customers will be better off financially with the £20/month
Moixa also offer a similar cash incentive for customers of their Smart Battery who subscribe to their GridSshare platform. See Electricity storage: a smart move?