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Chart of the Week


What’s in it for me? Household grid balancing

Oliver Archer Senior Analyst

The current dearth in energy demand and high renewable generation has brought the need for flexible consumption sharply into focus. Last weekend, Octopus Energy paid thousands of smart meter customers to use energy. Industry is now seriously looking at how households will be supported in their participation in demand side services, traditionally the domain of large commercial customers. This Chart of the Week looks at the potential benefits and flexibility models available to customers. Unlike larger industrial consumers, households are unaccustomed to rigorously managing consumption. Domestic energy expenditure is considered relatively infrequently, creating significant barriers of complexity and effort. This is one of the key challenges to building a domestic flexibility market - how best to communicate and sell demand side response to households so sufficient numbers sign up. A survey carried out in 2019 for Ofgem found that annual savings of £129/year would need to be available for 50% of households to engage in load shifting. Figure 1 shows that current estimates of the savings available through domestic flexibility are some way below this, with the exception of vehicle-to-grid charging. Providers of technology are now focusing on automation and AI, so assets and appliances can automatically respond to price signals while accounting for learned patterns and preferences of users. These advances reduce the effort required from householders to participate in flexibility and could make load shifting attractive at lower levels of annual saving. Octopus Energy is exploring this approach through its Agile tariff, with half-hourly variations in price triggering automated responses ...

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