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How do we get domestic consumers in UK to time-shift demand?

In UK there is little effective demand side response from the domestic sector. This is despite massive investment in smart meters, and a domestic sector that is the overwhelming cause of the peak electricity demand that occurs on winter evenings.

Currently the onus falls on industry to counterbalance domestic peak demand. The cement industry is a good example, where production has been largely shifted to off-peak times to take advantage of time-of-use tariffs, with the extra cost of paying workers for unsocial hours etc.

Getting domestic consumers to shift their consumption out of peak times has been put in the too difficult box, with OFGEM, the UK regulator, making no serious effort to motivate suppliers to do anything about it.

However, there is some good news.

About ten per cent of domestic consumers do already time-shift their consumption. These are in three broad and overlapping groups:

  • Economy Seven tariff payers. They pay a lower rate for electricity between midnight and 7am. They are usually owners of night storage heaters which were mainly introduced in the 1970’s to benefit from nuclear power stations operating at night. There about 1.5 million households in this category
  • Solar photovoltaic installation owners. They know that electricity is cheaper for them when the sun is shining, and many have though about other aspects of grid system efficiency. There are nearly one million in this category.
  • Technically aware and environmentally conscious individuals. Many of these will fall into the first two categories, and there may be a few hundred thousand additionally.

So, out of the twenty-five to thirty million domestic household consumers, between 2.5and 3 million are already doing something about the problem.

The conventional answer is smart meters followed by time-of-use tariffs will bring the change about.

Unfortunately it isn’t happening that way, for various reasons:

  • Smart meters have not been introduced in a way that lends itself to the easy introduction of time-of-use tariffs
  • There is no political will to address the fuel poverty issues that could arise if peak time costs are raised, as would need to happen in an unsubsidised introduction of time-of-use tariffs
  • Ironically, the extreme reliability of the UK grid means that most consumers give it little thought.

So, what is the solution?

This is an open question, so please comment on it.

Likely successful programmes may include:

  • A financial signal. Evidence from other countries suggests that it is the signal rather than the size of the inducement that matters.
  • A nudge awareness raising programme that includes peer pressure of some sort.
  • Flexibility in the messaging to adapt to changing technical contexts, e.g. to increase demand at times of high renewable output.

 

Tom Langdon-Davies's picture

Thank Tom for the Post!

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Discussions

Matt Chester's picture
Matt Chester on May 14, 2020 4:21 pm GMT

These are great questions, Tom, and I'll be following this closely. One question I'm curious to see as conversation of the time shift demand question develops is how it changes regionally-- are certain countries, localities, or regions better set up to make a push? Are there cultural aspects that show a difference in effective strategies? 

Thanks for starting the conversation, Tom!

Bob Meinetz's picture
Bob Meinetz on May 14, 2020 5:32 pm GMT

Tom, I think consumers tend to view demand/response programs as an attempt to shift what was formerly the responsibility of a utility - providing an adequate supply of electricity  - to the public, as a cost in convenience.

Sure, utilities say "consumers can save money by doing their laundry or cooking in off-hours." But in every instance of which I'm aware utilities raise their price of electricity first, making it necessary for customers to use electricity in off-hours merely to stay within their monthly budget.

At least in the U.S., demand-response and time-of-use pricing are band-aids designed to fix a fundamental flaw of market design: the decoupling of electricity sales from profit. The original aim of decoupling was to prevent utilities from encouraging the public to use more electricity. It was noble one, intended to reduce carbon emissions and dependence on foreign oil. But in the end, decoupling only warped the incentives of utilities to profit by other means - ones which often increased carbon emissions and/or raised prices.

Flat-rate electricity, with a guaranteed percentage of profit for utilities, was a business model with benefits for utilities, for consumers, and for society.

 

Julian Jackson's picture
Julian Jackson on May 15, 2020 9:57 am GMT

I have two main points to add to your insightful article. Firstly members of the younger generation have more environmental awareness, for example the School Strikers - and they are too young to be managing a household yet. (or at least I hope so :-)), so your third category will increase.

Secondly, we are entering an age of AI and "intelligent" appliances (the IoT) where our appliances can be programmed to save energy, so for example you could load the washing machine, and it would run itself when it got a signal that prices had dropped.  

More efficient devices are another area, although there is the danger of "Jevons Paradox" where more efficiency increases usage and therefore consumption.

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