New protections to enable consumers to benefit from cheaper energy deals
New proposals to give consumers confidence to take up smart devices.
- Consultation part of wider action to modernise the energy system, proposals will reduce pressure on the electricity grid, support up to 24,000 jobs and save up to £50 billion
- new measures to help consumers benefit from the best energy deals via a smart, flexible electricity system to save money on bills
- strengthened protections will mean consumers can be confident their data will be handled securely and that they can access the best deals using any device
Consumers are set to benefit from cheaper and more convenient energy deals as part of new measures to create a smart, flexible electricity system to help save money on bills.
New proposals set out in a consultation today will introduce minimum requirements for cyber security and grid stability, and minimum product standards for energy smart appliances to give consumers confidence to take up smart devices and make it easier for them to benefit from cheaper bills. Electric heating appliances with the greatest flexibility potential – like heat pumps – could also be required to have smart functionality.
Smart appliances enable consumers to manage their energy use to benefit from cheaper tariffs at times of low electricity demand, for example a smart charge point which waits for a period of low-demand overnight to charge the car. This will reduce the consumer’s bill while also ensuring that their car is ready to be used in the morning.
By shifting some electricity use away from peak periods, this will ease pressure on the grid and reduce reliance on backup fossil fuel generation and the need for new infrastructure like pylons, helping to save up to £50 billion by 2050. The use of smart systems and flexibility could create 10,000 jobs and increase GDP by up to £1.3 billion by 2050. A further 14,000 jobs could be created by exporting the technology.
Minister for Energy Efficiency and Green Finance Lord Callanan said:
Smart devices mean consumers with a smart meter can easily use the cheapest tariffs to charge their car or heat their home. These latest measures will help families get the best deal through their smart device and could help save up to £50 billion by 2050 - meaning lower bills for families, while supporting up to 24,000 jobs across UK.
Proportionate standards will be set for organisations providing smart energy services, giving consumers the power to easily compare services whilst ensuring they are not unfairly locked in or out of contracts, and preventing the mis-selling of services.
The plans will also address the issue of some tariffs only working with certain brands of appliance. This will ensure that appliances like EV smart charge points and smart heat pumps can work with any supplier or tariff, making it easier for consumers to access the best deals regardless of what device they have.
The flexible operation of smart appliances is supported by smart meters, which are unlocking smart tariffs for consumers, helping them save energy and money. Over half of British homes already have smart meters, meaning they can access cheaper, off-peak energy tariffs which can save households around £900 a year.
Sarah Honan, Head of Policy at The Association for Decentralised Energy said:
Public participation in our energy system is not a ‘nice to have’ but an absolute imperative to reach net zero in a cost-effective and secure manner. Following the first consultation and the passage of the Energy Act, this publication marks another important step towards unlocking the value of demand flexibility through smart-as-standard devices and competitive customer offerings from a range of service providers. We applaud the Department for Energy Security and Net Zero for continued leadership, agility, and pragmatism in devising regulations fit for the future of this burgeoning industry.
The measures also include a legal requirement to treat consumers fairly and require service providers to have a consumer complaints process in line with that required for energy suppliers, as well as access to a redress process. Government will also reduce the barriers to those switching providers and strengthen cybersecurity and data protection requirements for all smart energy providers.
Smart appliances
How does an energy smart appliance work?
An energy smart appliance can communicate with energy suppliers and service providers and turn up or turn down its electricity consumption to benefit the consumer and the electricity grid. For example, this can mean turning up or down at a specific time of day to access low-cost electricity through an off-peak tariff, saving the consumer money on their electricity bills.
Depending on what tariff or smart mode the consumer has selected, the device can also turn up or down its consumption depending on a request from the grid, such as turning consumption down in a period of high electricity demand, generating financial reward for the consumer and helping to maintain the stability of the grid. These devices include smart EV chargers, smart heat pumps and batteries.
How do they differ from smart meters?
Smart meters are upgrades to traditional energy meters. They are connected to a home’s gas and electricity supply and provided free of charge by an energy supplier. They measure energy consumption, send meter readings to suppliers to ensure accurate billing and help you track your energy use and costs via an In-Home Display. A smart meter in pre-payment mode will enable you to top-up your balance from home without needing to visit a shop.
What impact will smart appliances have on people’s bills?
They will lower costs by enabling people to better access and more ability to shop around for cheaper off-peak tariffs.
By shifting how and when people consume electricity we can smooth out peaks, reducing the need for investment in new energy infrastructure and lowering consumer bills.
What about smart meters?
With a smart meter, you will be billed for energy you have used. Your bills will be based on accurate, automatic readings rather than estimates. The smart meter In-Home Display helps consumers better understand their energy consumption, encouraging energy and bill savings.
Smart meters also allow consumers to access and benefit from more flexible tariffs, which provide cheaper rates for off peak energy usage.
The total bill savings to households over the course of the smart meter rollout are estimated to be £5.6 billion.
Will energy be more expensive at peak times?
Consumers already have a choice of different tariffs, including flat rate tariffs and tariffs which have different prices at different times of day. The plans announced today are not changing what services or tariffs energy suppliers can offer but are simply making it easier for consumers to choose the right tariff for them and to avoid being locked into deals that may no longer work for them.
Will smart appliances cost more?
Smart appliances have numerous advantages over non-smart appliances and their price currently reflects this however we expect this to reduce over time as the market grows. Consumers will also be able to make back the price premium over the lifetime of the product through smart use and the associated bill savings – and our plans will ensure that consumers are not locked-into smart tariff deals that no longer work for them.
What control do people have over their smart appliance?
Using an energy smart appliance, like a smart heat pump, EV charger or battery gives customers control over their energy usage, with the option to use electricity at times of low demand, when the price is cheaper.
However, you will always have the option to use an appliance’s smart function and can turn it off and use the device in non-smart mode whenever you want. Smart appliances give consumers more choice, not less.
What data and cybersecurity protections are in place?
Consumers using energy smart appliances are already protected by standard privacy measures. As the use of smart appliances increases – and with it the risk of cyberattacks – we will introduce a proportionate approach to cyber security, giving industry sufficient time and notice to update their products accordingly but putting the protection of critical national infrastructure and consumer data protection first and foremost. We are working in partnership with industry to develop a set of standards that takes account of best practice.
Initial protections have already been put in place for EV smart chargers through the EV (Smart Charge Points) Regulations 2021.
How will this help reduce reliance on fossil fuels?
By managing demand peaks and reducing pressure on the electricity grid, we can reduce use of backup fossil fuel generation and better manage the cost of running our electricity system, which we expect will only increase as we electrify heating and transport and connect more renewables to the grid.
Smart appliances can be programmed to charge or otherwise activate when electricity is cheap and abundant – when wind or solar generation is particularly high, for example. This will also minimise our reliance on backup fossil fuel generation and avoid the need to build new energy infrastructure such as power plants and pylons. So smart appliances will empower consumers to make green choices and help us on our path to net zero.