the suppliers had a scheme whereby the first xxxkWh were at a certain rate and then above that threshold, the cost per unit increased for that billing period.
Yes. That's a rising consumption-related tariff.
One of Ofgem's options in their Consultation is for a Falling Block Tariff.
In that scenario, those who opt for a Zero-Standing-Charge tariff would be charged more for the first number of units, and then less once they pass the threshold.
As that would penalise the consumers who have the lowest consumption, I'm surprised they've even made the suggestion!
If Block Tariffs are going to be introduced, then I can only see one ethically acceptable option, which has
Block Tariff applied to a set of half-hour periods on a daily basis
A Rising Block Tariff, whereby the first set of units below the threshold are cheaper
Those were the assumptions when the SMETS2 Specification was created in 2013/14.
and unless they rose above a defined consumption per quarter* might avoid standing charges
That would require each Energy Supplier to write new functionality into their Billing Software... ... and for Ofgem to create a new regulatory mechanism to handle customers who switch Suppliers in the middle of the Quarter.
Whereas the Block Tariff mechanism which exists in each Smart Meter is already a 'standard'.
I am uncertain as to how this would be implemented for consumers on pre-payment meters as there is probably no means of time related consumption measurement built into ‘dumb meters’ is there?
Prepayment meters have all the same functionality as any other Smart Meter.
The same internal registers hold consumption data per half-hour, and the same Block Tariff system would be applied automatically if it were implemented per day.
I have no idea if Ofgem understands that, however.
A Block Tariff can potentially be used as a mechanism to alleviate social pressures.
Imagine these potential situations:
a patient is to be discharged from hospital, but will need higher room temperatures and medical equipment at home (hoists etc)
a family has suffered from a life-changing event, such as the unexpected death of the bread-winner
In such circumstances a Social Worker or Occupational Therapist could have the authority to request that the Block Tariff feature be temporarily removed.
As the household gradually aligns itself with the new reality, the Energy Supplier can look at the half-hourly consumption data for days/weeks, and advise on a more suitable tariff.
Equally it gives the relevant authorities sufficient time to get a storage battery installed, for example, and effectively move the house to operate off-grid, achieving greater resilience.
The temporary suspension of the block tariff can be viewed as a 'virtual battery' before the actual hardware is present.
In this context @toodles being profligate would be a household which doesn't reduce its energy consumption during the high-demand periods within the tariff.
Thus, if daily block tariffs were implemented, a profligate consumer would use electricity irrespective of whether it brought them into the extra-charge envelope.
This is really bad news and is exactly what the energy companies and numerous others are lobbying for.
Demand-side Flexibility is the official name - I've spoken about it here before. It is literally the Uberisation of energy with surge pricing. Do not support this. It is leading down really dark roads and so far some other countries are refusing to implement it to any great degree. Surge pricing is a pandoras box for greedy energy companies.
It is not the place of the consumer to cover for the lack of investment private companies imposed on the grid while paying out to shareholders. There's nothing noble in it. You are not saving the planet.
Imagine if Thame water asked you to fish the sewage out of the rivers and pay more for clean water at lunchtime.
Young families with kids have no choice for example, to not use energy during peak times as do plenty of other consumers.
Imagine coming home from a zero hours contract job tired and stressed to collect the kids, feed them and do homework, watch TV or Playstation bath or shower before bedtime. Then dirty clothes get thrown in the machine for school tomorrow because 7 year olds play football in mud and little girls spill paint and you don't own multiple sets of clothes. Dad comes home at the same time from a building job, tired, hungry and aching to sit in a hot bath... But hey, your electricity is being charged £1 per Kwh between 4pm and 7pm and you already struggle to pay your bills on the national minimum wage...
We already pay the highest charges in Europe please don't accept any surge pricing nonsense.
I also commented before in other threads specifically on different tariff regimes - another part of my work looking at markets in Europe alongside grids. Spain manages to have various levels of payment and exceptions to rules to cover energy poverty and low income and banded by consumption so there's various other options possible. BUT we must keep the low waged, sick and elderly in mind.
But... please don't suggest energy support is included in benefits or it will get axed at the first opportunity. Britain is vicious about these things in ways no other country is. 🙁
@transparent the state has no money to cover the upfront cost of installing batteries. There is little chance of central and local government taking on more debt right now. The social housing providers also don't have the money, nor can housing associations borrow it as they are already forecast to have insufficient income to cover loan repayments currently in the coming years due to higher interest rates.
The only way to get batteries into social housing would be via the private sector funding and owning them and taking the majority of the income.
The government has already reduced the requirements for getting a grant for a heat pump under the boiler upgrade scheme so it is no longer a requirement to install insulation if required. I can't see the government introducing red tape to oblige private landlords to install batteries, the direction of travel is the other way. I can't imagine a battery ever being a prerequisite for a heat pump grant for jo public, the government had to dramatically increase the grant just to get a decent traction in basic heat pump installations.
I think you come up with a lot a great ideas, I am less convinced they are grounded in what is achievable, but perhaps pushing the boundaries is a good thing and what you are trying to do. I am wary if you push too hard your voice will be ignored?
The government are quite happy for the network operators to upgrade the grid as it doesn't appear on the national debt. One of the challenges is who pays with all these things so there will be a fudge and the end solution will be a compromise I suspect.
@jeffThe government are quite happy for the network operators to upgrade the grid as it doesn't appear on the national debt. One of the challenges is who pays with all these things so there will be a fudge and the end solution will be a compromise I suspect.
Absolutely correct and this has been the sleight-of-hand that is underpinning the dreadful state of British infrastructure right across the board. Most of Europe kept a tighter state grip on these things.
The EU has pooled funds for national governments to draw upon for grid and clean energy upgrades. This means that most European countries are using a combination of state and private investment but generally with far stricter oversight and regulation than the UK.
However, we are throwing billions of state money at it all via Contracts for Difference, Power Purchase Agreements, Feed-in Tariffs or whatever... Never mind the tax breaks, 'Special Economic Zones' and so on. It's a huge multi-billion £ honey pot with endless competition to shape the terms and grab the most. So the money is there, it's how it is being spent that is the issue.
Brett Christophers wrote a very good book on all this - The Price is Wrong - it doesn't make particularly happy reading but he's ex-City of London before academia and he knows his stuff. The FT loved it so much they reviewed it four times. He argues that the very nature of decarbonisation actually reduces profitability in the long term so the private sector sucks up more and more state finance.
I do think we need more public information and input - once again Britain is pretty bad at these things and pushes consultation as a form of box ticking that then gets ignored. Ofgem are good at that one.
Indeed @broadsman and I had been intending to add another comment, but instead spent several days trying to wrest domain names and email archives out of the hands of a 'service company' 😥
@transparent the state has no money to cover the upfront cost of installing batteries. There is little chance of central and local government taking on more debt right now. The social housing providers also don't have the money
And this is the problem with looking for answers to the high price of domestic energy.
There is actually a staggering amount of money being leveraged from the pockets of consumers.
The present regulatory framework (overseen by Ofgem) permits most of that money to be acquired by the Energy Suppliers, DNOs and Transmission Operators.
The amount of money they will be permitted to bill us over the next 25 years is vastly greater than the cost of installing storage batteries in 10% of households. That's the level of storage infiltration required to allow Britain to not upgrade the 11kV electricity grid.
It's the regulatory system which needs changing, or, as @lucia put it:
Demand-side Flexibility is the official name - I've spoken about it here before. It is literally the Uberisation of energy with surge pricing.
Flexibility Services are different to what DESNZ is calling Demand Side Response.
Grid Flexibility Services have been deployed over the past decade to overcome numerous short-term deficits in the supply/demand balancing. They are predominately at the 11kV level, with a few at 33kV. In other words, they are extremely local issues.
The area in question is called a Constraint Management Zone (CMZ).
The map below dates from 2019, during a bidding round when Western Power Distribution was seeking Flexibility for the following year
Here's the zoomed-in map for an area of Zummerzet which identifies the affected Primary substations:
and here's the procurement chart for Bridgwater:
Anyone could offer generation during those periods, or be contracted to reduce consumption. Contracts were drawn up, detailing the payments to be made for taking part or being held on 'standby'.
Demand Side Response was a concept proposed around 2017 which would provide better grid balancing without the need to bid during Procurement Rounds.
There were several ways in which DSR could operate, depending on how consumers wanted to become involved.
The amount of money they will be permitted to bill us over the next 25 years is vastly greater than the cost of installing storage batteries in 10% of households. That's the level of storage infiltration required to allow Britain to not upgrade the 11kV electricity grid.
Really, only 10%, thats much smaller than I imagined. Doesn't seem a particularly challenging target to me given the right incentives, which surely aren't that far from where we already are. Batteries almost make financial sense/already do for some even now!
4kW peak of solar PV since 2011; EV and a 1930s house which has been partially renovated to improve its efficiency. 7kW Vaillant heat pump.
That 10% is an estimate @jamespa but it's worthwhile noting that it has more than double the effect which you might at first suppose.
Looking at the crucial 11kV level of the Distribution Grid:
the key is to time-slice what the 11kV network can supply to us.
The most obvious characteristic to tackle is the 'early evening peak', because grid capacity is only dictated by maxima.
All homes with a storage battery can reduce their demand to zero during that period. Each house hasn't just flattened their peak, but completely released their portion to be shared amongst others.
Secondly, properties with in-house storage can increase their demand on the grid (for re-charging) at times when there is excess local generation.
Even if that generation is from wind- solar- or hydro connected to the 33kV level, absorbing it via the 11kV feed to domestic properties will reduce the bottle-neck caused by limited capacity on the 132kV and 400kV transmission grid.
That's very valuable.
It means we won't have to spend so much on upgrading those top two tiers of the grid.
Ignore for the moment the precise detail as to how each in-house battery is going to 'know' when to recharge.
But we would need nodal pricing to make this work.
There's no point having surplus generation from wind-farms off the Lincolnshire coast, and then pretending that it can be used to supply consumers in Dorset!
That 10% is an estimate @jamespa but it's worthwhile noting that it has more than double the effect which you might at first suppose.
Looking at the crucial 11kV level of the Distribution Grid:
the key is to time-slice what the 11kV network can supply to us.
The most obvious characteristic to tackle is the 'early evening peak', because grid capacity is only dictated by maxima.
All homes with a storage battery can reduce their demand to zero during that period. Each house hasn't just flattened their peak, but completely released their portion to be shared amongst others.
Secondly, properties with in-house storage can increase their demand on the grid (for re-charging) at times when there is excess local generation.
Even if that generation is from wind- solar- or hydro connected to the 33kV level, absorbing it via the 11kV feed to domestic properties will reduce the bottle-neck caused by limited capacity on the 132kV and 400kV transmission grid.
That's very valuable.
It means we won't have to spend so much on upgrading those top two tiers of the grid.
Ignore for the moment the precise detail as to how each in-house battery is going to 'know' when to recharge.
But we would need nodal pricing to make this work.
There's no point having surplus generation from wind-farms off the Lincolnshire coast, and then pretending that it can be used to supply consumers in Dorset!
Understood, but it feels like a no-brainer. As I remarked above b atteries almost make financial sense/already do for some even now!
4kW peak of solar PV since 2011; EV and a 1930s house which has been partially renovated to improve its efficiency. 7kW Vaillant heat pump.
Flexibility Services are different to what DESNZ is calling Demand Side Response.
Er, cough, ahem.... scuwz me... I most definitely bow to your superior grid knowledge but you were talking about Time of Use tariffs and price envelopes etc., that is called 'Demand-side flexibility' or 'Demand-side response' (or variations) not only in the UK but world wide in energy / grid systems. This is what 🐙 were trialling.
In this context @toodles being profligate would be a household which doesn't reduce its energy consumption during the high-demand periods within the tariff.
Thus, if daily block tariffs were implemented, a profligate consumer would use electricity irrespective of whether it brought them into the extra-charge envelope.
This (extra charge envelope - higher pricing for busy grid times) is what the industry calls Demand-side Flexibility and I refer to as the 'Uberisation' of energy. Tariffs are imposed at national level apart from current distribution network charges which by their very nature cannot be time-based.
They have worked the other way with 'negative pricing' when people are given 'free electricity' - although that's not going to get built into any future system. Sadly.
The energy policy world fall over themselves with word salads thus we have 'price signalling' which in reality is a form of surge pricing. I see it as being rather like a cattle prod to force behavioural change.
Zap! 💥 "You had the heating on AND cooked food at 5pm: computer says that cost you £9squillion per Kwh". 💥
Behaviour being the operative word - it's all derived from the highly dodgy (imo) ideas gleaned from behavioural economics (remember George Osbourne's Nudge Unit?).
In the 90s I used to teach an undergraduate social science course but didn't choose the curriculum - the students got an essay to write on behavioural psychology. They all used to moan and ask why because it had been heavily discredited and they thought it was irrelevant. I often think of them these last few years.
If you believed everything you read you would find that D-SR has almost magical powers in it's ability to reduce the need to spend money on grid infrastructure, cut carbon emissions (that's been thoroughly debunked now), make the poor rich (alright, I'm exaggerating [🫢😁] but there are plenty who think that it is giving low income people an 'opportunity' to save/make money).
Meanwhile, I fully endorse the battery idea it's economically-speaking a 'no-brainer' particularly alongside local generation and transmission systems and community energy. But as @jeff said everything has to be 'off the books' so to speak. So it won't happen.
@broadsman Forgive me for laughing (and for us utter geeks derailing your thread 😁) but there's a lovely bunch of people here with interesting ideas and knowledge and sometimes it is just plain irresistible. 🤓😂
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