Winter blackouts: How will the money-saving energy scheme work?

Turning off the electricity at peak times could save you from blackouts - and also put money in your pocket  (John Shahabeddin/PA)
Turning off the electricity at peak times could save you from blackouts - and also put money in your pocket (John Shahabeddin/PA)

Amid warnings of potential blackouts this winter, a new scheme has been launched to avoid blackouts and potentially help families save money.

The National Grid plans have been given the go-ahead by the energy regulator Ofgem, which means families could save up to £100 on energy.

It will be called a Demand Flexibility Service and will run from November until March.

So how can you sign up, and how much could you save?

Who can sign up?

At the moment, Octopus Energy is the only supplier which appears to be signing up customers. It estimates that the system might be used around 13 times this winter to prevent shortages of energy on the grid.

So far, around 350,000 of the company’s customers have signed up to the scheme.

The scheme is also entirely voluntary, so no one will be forced to participate.

How does it work?

If you are able to sign up, your supplier will ask you to reduce your electricity use during certain hours. when the supply of electricity is low this winter.

For instance, you could get a text on a Thursday saying that high demand is expected tomorrow, between 5 pm and 7 pm.

If you then use less electricity during those hours than you would normally, your supplier will reward you.

You can still use electricity during those hours, and you will not be punished if you use the same amount or even more than usual during that period.

Does it give the grid the right to shut off supply to my home?

No. You still have total control over your electricity use.

Why has this system been developed?

There are a lot of benefits to developing a system like this. It can be used to help balance the electricity grid in the future, on days when there might be lower wind or solar power available.

But the reason the system is being prepared for this winter is partly to avoid potential blackouts during peak-use hours if the supply of gas to power stations dries up.

If demand from households and businesses is higher than the amount that power generators can supply, there might be blackouts. This can help reduce that risk.

How much money can I save?

This is unclear and depends on how your supplier decides to run the programme.

Ovo Energy, which is running its own version, says that households could save around £20 each month if they reduce their use during peak hours.

How will the money be paid to me?

This will depend on your supplier. Some might give you vouchers, others might refund money, and many will probably just cut the amount from your energy bill.

Do I need a smart meter to sign up?

Only customers with smart meters will currently be able to take part. The Electricity Systems Operator says that it needs half-hourly data from households to run the scheme.

But, if your supplier can figure out a different way to get data on your use every half-an-hour, then you might still be able to sign up.