How consumers can make money by reducing energy consumption

Consumers who lower their electricity consumption stand to gain $2 per kWh, according to one power retailer.

The cashback – offered by Octopus, which has been operating as a retailer in New Zealand since 2022 – is for people who cut their energy consumption when there is a conserve power warning issued.

Those warnings are for when forecast demand is expected to exceed supply.

A recent example is from May, when National grid operator Transpower issued a notice as a cold snap hit. There was low wind and some generation was offline due to maintenance creating the perfect supply storm.

And Octopus Energy chief operating officer Margaret Cooney told Checkpoint more consumers should be rewarded for saving electricity.

“We’re going to pay people $2 per kWh for electricity usage reduced versus what they would normally use.”

Transpower gave power retailers about a 24-hour heads up of potential grid issues, when market prices usually spiked to $2000 per megawatt.

Cooney said “we figure if we’re avoiding that cost, let’s pass it on to the consumer and that’s essentially what we’re going to do”.

Cooney said there were five ‘conserve energy’ events in the winter of 2023. This year, there could be another five or more, she said.

“We’ll message our customers that have signed up for this to say, ‘in four hours’ time we’re expecting this event or, tomorrow morning we’re expecting this event, can you reduce your consumption?’

“It’s an optional thing, and if they choose to reduce then they get that benefit of $2 back.”

A typical household used 5-6 kWh of energy from 7am to 8am, and then around dinner time, she said.

Those who could reduce that consumption would get the $2 per kWh, Cooney said.

“For context, if you avoided using your oven, so you had your slow cooker on during the day and avoided putting the oven on for an hour, that would be about 2.5 kilowatts that you avoid, so you’d get $5 essentially for avoiding that.

“It does require people to think a bit differently and think about, ‘I’m going to do something ahead of time,’ whether that’s cranking the heat pump up a bit early and then turning it off during the event or something. There is definitely an opportunity for most households to reduce their usage.”

In the UK, the company had 1.5 million customers opting for this scheme regularly in the winter.

“They generally reduce to about half of their usage, so Kiwis should be able to do something similar if they are interested and engaging in it.”

She said as the industry moved towards more renewable energy and smart appliances, all consumers should be able to access rewards if they reduced consumption.

It comes as households face an increase of $15 a month in electricity bills from next year if Commerce Commission proposed prices are confirmed.

The commission regulates prices and performance standards for national grid operator Transpower and local lines companies.

Commissioner Vhari McWha said the higher prices were necessary to fund investment in the electricity network.

According to the news on Radio New Zealand

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