Octopus energy, one of the many challenger energy providers to have sprung up over the past few years, has released a new variable tariff .
This means that during periods where demand for energy had dropped then customers could end up being paid.
Spring and Summer for example, are times when there isn’t nearly as much use for energy, due to more hours daylight and warmer temperatures. Additionally, high levels of sunlight or wind massively increase production of renewable energy, boosting supply. When this happens, energy suppliers are paid money to withdraw energy from the system as there is, quite simply, nowhere for it to go. Because of this, National Grid is considering incorporating households into its flexibility programmes. Based on this functionality, customers who decide to join this new tariff from Octopus will be notified when there is a ‘price plunge’ and will be compensated for the energy that they use.
Octopus currently only deals with domestic customers, they have said that they are considering expanding this tariff to commercial customers as well.
“If any businesses would like to sign up too we’d love to hear from them,” said Octopus founder and CEO Greg Jackson.
“By reflecting the real cost of energy on the grid every half hour, customers can capitalise on times when prices are especially low. If the wholesale price goes below 0p/kWh, Octopus Agile will actually pay customers to take the unwanted energy from the grid. As renewable energy production grows these events are only going to become more frequent.”
The energy supplier will relay information to customers at half hourly intervals during periods of low demand. This will mean that customers can schedule electric intensive activities ,such as using washing machines or charging electric cars, to be completed at a time when prices drop or, ideally, when they turn negative.
The upshot of this is that customers will pay more for the energy that they are using when demand outweighs supply and energy goes over the wholesale cost. Octopus maintains that most people will save money from this scheme as the wholesale cost is less than the normal price for 80% of the time. Octopus have capped the maximum you can pay at three times the normal amount but according to the energy supplier this will only happen 0.1% of the time.
The tariff, which provides 100% green energy, appears to be paving the way for a future where energy companies can capitalise on an excess of renewable energy by encouraging increased usage from consumers when prices are low. This in turn takes pressure off the national grid as well cutting the overall cost of energy supply.
Octopus appear to be riding a wave of success. The innovative tariff comes just after the independent energy provider topped an independent customer satisfaction survey.