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More than a third of people would let their energy supplier turn off their heating

By Michael Fell, on 23 March 2015

nestA sinister engineer in orange overalls and dark glasses looms from behind your fridge, hands raised, as if to strike… This is the scenario painted in the Daily Mail in a 2013 article on ‘direct load control’, or the possibility that third parties (‘outside forces’) such as energy suppliers could turn appliances in people’s home off and on to help keep the UK’s electricity system in balance.

The concerns raised in the article are not without foundation in the research literature. A range of studies (e.g. by Darby & Pisica (2013), Mert (2008) and Rodden et al. (2013)) have found that people are indeed worried about automation and loss of control in ‘demand-side response’ programmes, which aim to influence when people use electricity. But this type of study can only tell us about the existence and nature of such concerns, not how widespread they may be in the general population.

We conducted a survey of over 2000 people across Great Britain to try to find out what people think of a range of demand-side response tariffs, including those involving automating response to price changes and direct load control. In a previous blog, my colleague Moira Nicolson described how such tariffs can benefit the UK’s electricity system, and showed that almost a third of British consumers are favourable towards a simple ‘time of use’ tariff that charges people more or less for electricity at fixed times throughout the day and night (similar to Economy 7 [Wikipedia link]).

As part of the study we found that more than a third (37 per cent) of people were in favour of switching to a tariff that gave their electricity supplier the ability to remotely turn off and on electric heating when demand for electricity is high, in return for money off bills – similar to the situation described in the Daily Mail article above. Only 30 per cent of people were against switching to the tariff. While the tariff in question gave the supplier only very limited control, and the consumer had the option of unlimited overrides, we believe this shows that most people do not have objections in principle to direct load control. This is important because direct load control offers different benefits to ‘time of use’ tariffs, such as allowing a very rapid and reliable response when that is needed.

dsr_chart

We also looked at so-called ‘dynamic’ time of use tariffs, where prices for electricity differ from day to day in response to factors such as the amount of power available from wind generation. This was the least popular option we presented. However, when people had the option to automate their response to price changes, the tariff became as popular as the simple ‘static’ (i.e. like Economy 7) time of use tariff. Our data show that people rated the automated option as easier to use and more likely to be beneficial to them (e.g. through saving money).

This is encouraging because, as well as allowing the system to respond to less predictable factors such as wind generation, automation (like direct load control) has been shown in a Government review of evidence to yield a more reliable and durable response from people than if they are expected to respond manually to price changes.

Our results show that there is a genuine appetite amongst consumers for new kinds of tariffs that reward people for changing their consumption patterns. More and more homes in the coming years will get the smart meters that will allow such tariffs to be used. However, reform will be needed (as laid out by Ofgem) to the way in which the industry buys and sells electricity to ensure that the incentive is there for companies to develop products and services that many people evidently want.

 

By Mike Fell (@mikefsway)

For more information on the research, see an online copy of the report Is it time? Consumers and time of use tariffs which was launched on 10 March 2015 in Parliament (authors: Michael J Fell, Moira Nicolson, Gesche M Huebner, David Shipworth). The event was chaired by Dan Byles MP, member of the Energy and Climate Change Select Committee, and was also addressed by Sacha Deshmukh, CEO of Smart Energy GB (who supported the work). The launch was followed by a wide-ranging discussion with key representatives from the energy industry, the energy market regulator Ofgem and the Department of Energy and Climate Change.

Photo: David Dodge, Green Energy Futures (CC BY-NC-SA 2.0)

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