Clean energy firm pays green homes amid lockdown
A drop in energy consumption combined with sunny, breezy weather led to the UK’s lowest electricity prices in 10 years last Sunday, with one supplier even paying its own customers to use energy.
Energy prices tumble due to lockdown
Wholesale energy prices have tumbled recently, with the government-enforced coronavirus lockdown and the closure of pubs, restaurants, factories and offices leading to a drop in energy usage between 9% and 13%, according to analysts at Cornwall Insight.
Although most Britons were unable to make the most of the spring weather at the weekend, green energy customers with Octopus entertained themselves at home while being paid to use electricity generated by clear skies and wind on Sunday.
40% of all of the UK’s electricity that morning was produced by wind farms, with solar power making up another fifth. Only 15% was generated from fossil fuels, with 1.1% of that coming from coal.
Around 2,000 Octopus Energy customers on its Agile Octopus tariff were contacted by the supplier to inform them that they would benefit from so-called ‘negative’ energy prices and be paid for their daytime green energy consumption. Customers stood to earn between 0.22p and 3.3p per kWh to make use of the UK’s abundant surplus energy. This is because the UK electricity grid is not designed for energy storage and electricity is perishable - use it or lose it.
The tariff, introduced in February 2018, allows customers to benefit from cheaper electricity costs when wholesale prices fall, usually outside of the daily peak energy demand period of 4pm to 7pm. These savings are then passed on to Octopus customers.
Known as a time of use tariff, the Agile Octopus plan benefits from the use of smart meters and other technologies, allowing customers to optimise their energy usage and save money when wholesale costs are at their cheapest through its ‘plunge pricing’ policy.
When supply outstrips demand - as happened at the weekend, with wind turbines and solar panels producing far much electricity than needed - providers are incentivised to take energy off the grid. Octopus then passes this on to its customers and pays them to make use of this surplus energy.
Although home energy use is at a peak at present, due to government instructions to self-isolate and work from home, there has been a sharp decrease in electricity demand from shops, restaurants, railways and factories.
It’s not just Octopus customers who have benefited from a lack of energy demand elsewhere during the coronavirus crisis - consumers on variable plans with other providers have also seen a drop in costs, as their tariffs track wholesale energy prices and change over time.
The market price of electricity has dropped a third from January and this trend looks set to continue as the country remains in lockdown.