Octopus Energy offers a tariff that will charge customers according to demand
A small energy company has launched a new tariff that will potentially pay customers to use its electricity when demand is low.
Octopus Energy’s new Agile tariff tracks wholesale electricity prices, allowing customers to take advantage if there is an excess of supply and the electricity price “goes negative”.
Across Britain, whenever more electricity is generated than consumed, wholesale prices fall – sometimes to below zero – at which point suppliers are paid to take energy off the grid.
This typically happens on windy, sunny weekend days when wind turbines and solar panels are producing lots of power and demand is relatively low.
When this happens customers on the deal will be alerted by text, email or their mobile phone app. They can then start their washing machines or charge their electric car.
When demand exceeds supply and the wholesale price rises, users will be charged the higher price. The company has capped the maximum amount customers can be charged at 35p/kWh – about three times its standard electricity price.
Greg Jackson, founder and chief executive of Octopus Energy, said: “This tariff is groundbreaking. By reflecting the real cost of energy on the grid every half-hour, customers can capitalise on times when prices are especially low. Indeed, if the wholesale price goes below 0p/kWh, Octopus Agile will actually pay you to take the unwanted energy from the grid. As renewable energy production grows, these events are only going to become more frequent.”
The company said most customers will benefit as the wholesale cost is below the standard price 80% of the time. It only expects prices to be at the maximum for 0.1% of the time.
If the electricity infrastructure suffers significant long-term failure such a power station falling out of action, customers can switch out of the Agile tariff without penalty, it said.
To sign up, customers must have a smart meter and agree to moveable pricing. Gas is charged in the conventional way.