Energy saving scheme: How you can claim cash benefits for using less energy this winter

The National Grid announced it would be renewing its demand flexibility service, under which customers are financially compensated for reducing their energy consumption this winter

Smaller households are more likely to suffer from energy bill differences this winter (Danny Lawson/PA) (PA Wire)

Households that cut back their energy consumption during peak hours this winter will once again be eligible for cash savings, as part of the National Grid’s scheme to avoid blackouts during the cold season.

The National Grid’s Energy Service Operator (ESO) on Friday confirmed it was reintroducing its demand flexibility service (DFS) and that “it is keen for more consumers, both large and small to get involved”.

Jake Rigg, corporate affairs director at National Grid ESO, told The Telegraph: “The ESO will be reintroducing the Demand Flexibility Service for this winter and is keen for more consumers, both large and small, to get involved.

“We want to work with industry to build on the past success of this new and innovative service.”

Earlier this year, the ESO announced it would extend the scope of the energy savings scheme, first introduced last year amid a cost-of-living crisis, to cover businesses and factories in the UK.

Mr Rigg separately told the newspaper: “We’ll be working really closely with different industries to try and help them with that and make it as attractive as possible, particularly for businesses that obviously are struggling with energy costs as well – it could be quite helpful from that point of view.”

The renewed scheme will run from November 2023 until March 2024, when customers will be asked to cut their electricity usage when supplies are particularly stretched in exchange for savings on their bills.

Here’s everything you need to know about signing up to the service and claiming its cash benefits:

What is the DFS?

Every minute of every day the grid needs to ensure that the amount of electricity being produced in or imported to Britain exactly matches the amount being used.

If demand and supply are not well balanced it could lead to the grid collapsing.

The national grid needs to ensure electricity supply and demand are exactly matched every day (PA Wire)

Traditionally, in order to ensure they are matched, the grid got more supply online by telling power plants to produce more.

But the DFS, launched last autumn, adds a new string to its bow where the grid can reduce demand at specific times by asking people and businesses to cut back, and rewarding them financially if they do.

Am I eligible for the National Grid’s DFS?

Around 14 million homes in England, Scotland, and Wales that are fitted with a smart meter, which provides half hourly readings to energy providers, can sign up to take part in this savings scheme.

If you have a smart meter, you can take part in the energy savings scheme via your energy supplier, who will contact their customers by email if they’re listed as registered providers.

Last winter, 31 suppliers – including British Gas, Octopus Energy, Utilita, and E.ON Next – signed up for the trial.

How does the scheme work?

Customers will be called on to reduce their energy consumption during 12 planned tests between November 2023 and March 2024.

These hour-long demonstration events will be conducted during weekday evenings to ensure the system is functioning properly as well as incentivise participation in the service, in case energy supplies are unaffected this winter.

Each of these tests will last for one hour, during which households and businesses should cut back on the most energy-intensive appliances and, therefore, help ease the pressure on the grid.

Electricity is sold per kilowatt hour (kWh), which are indicated by units on your electricity bill. For context, boiling a full kettle of water typically uses 0.2 kilowatt hours and washing a single load of clothes in your washing machine is equal to 0.5 kilowatt hours.

The ESO will pay energy suppliers £3 per kilowatt hour that is saved, and it will be up to individual providers to decide how much of that to pass on to customers.

Appliances that use electricity to produce heat are generally the best things to turn off (PA Archive)

Those who sign up for the DFS may also be alerted to a live event, when the grid is under pressure over electricity demands, during which they should similarly restrict their electricity usage.

Last year, the National Grid used the service 22 times, including two live events, as 1.6 million homes across the country took part in the scheme. In total, they saved over 3,300 megawatts of electricity were saved – which is roughly enough to power almost 10 million homes.

How much can I save on my energy bills?

A typical household can reportedly shave up to £100 off their energy bills if they participate in all 12 demonstration tests over the five-month period.

Octopus Energy, which saw 700,000 customers sign up for the service, said the best-performing homes were able to save an average of £40 of their bills when they participated in the scheme’s trial last winter.

The most active supplier in the DFS, Octopus Energy also said customers that opted in to the service last year got around £3.37 for every unit of electricity they save.

A typical household can reportedly shave up to £100 off their energy bills if they participate in the demonstration events (PA Archive)

Some electric ovens use around one unit every hour, so if you normally use your oven between 5pm and 6pm you could save more than £3 by using it after 6pm instead.

How can I maximise my savings?

The best things to turn off to save electricity are usually applicances that use electricity to produce heat, including electric heaters, water kettles, microwaves, and ovens.

It does not make much sense to switch off your lights during these hours, because lightbulbs take very little electricity, and it would mean switching them off for hundreds of hours to save £3,

The grid has underscored it is “not asking people to go without electricity” and that the DFS is about reducing your electricity use where possible.

It also confirmed that participating in the DFS is entirely options and customers will not be penalised if they don’t reduce usage despite signing up for the service.

Additional reporting by agencies.