We’re currently running a large scale beta for a new electricity smart tariff, which is open to members right now.
The smart tariff has three rates. Peak, Off-peak, and Overnight. It’s designed to reflect the true cost of energy to our members, encouraging them to avoid electricity use at peak times and instead use it when it’s cheaper and in ready supply. We feel this was important to do. As well as the potential of saving money, preventing such a big spike in demand around teatime makes renewable energy sources more viable.
But before testing this tariff on a larger scale, we wanted to understand what effect a financial incentive to avoid peak times would have on people’s behaviour. Would our members really be able to adjust their peak energy use and save money on a 3-rate tariff?
We built a scaled-down version of the service, and asked a small group of members to try it out in their homes.
In Bulb Labs we name all our experiments after Scottish islands. Project Jura was the name of the trial we ran over the summer with Bulb members to test our 3-rate tariff.
The members we worked with had signed up for experiments on our Bulb Labs website. With their permission, we installed energy monitoring devices in their homes to simulate getting the kind of data we will get from the SMETS2 (second generation) smart meters we’re beginning to roll out.
We also gave participants an app to keep track of their energy use across the day. It encouraged them to avoid using energy at peak times by rewarding them with ‘leaves’. They were also given a rebate on their bill at the end of the month reflecting how much they’d been able to save, so they were also receiving cold hard cash.
A real eye-opener
The trial was a success. Our members all learned something new about their energy usage and were keen to share their knowledge and energy reduction tips with each other.
Gill in Derby learned how much energy her dryer was using and switched to air drying her clothes whenever possible.
Bella in Dulwich discovered her Quooker hot water tap zapped electricity all day, but she was really only using it in the morning. It’s now been turned off.
Charlotte in Ashton-under-Lyne discovered the difference in energy costs between using the oven and the microwave and liked making more informed choices around how to cook food.
Steve in Rochester had the true cost of his immersion hot water revealed to him and realised how much money he could save ensuring it was only turned on when the electricity was cheaper overnight.
Savings to be made, lessons to be learned
On average the members in the trial managed to reduce their peak energy use by 33%, with the 4 best performers reducing their energy use by a whopping 60%. A pleasant side effect of being in our trial was that the members that took part actually also reduced their overall energy use by an average of 18%.
This has given us the confidence to design a tariff that will not cost an average member more if they don’t change their behaviour but empowers people to focus on avoiding the busiest time of day for electricity use and reap savings of up to 10% on their bills by shifting their energy use away from peak time.
This could save an average household £40 a year by making simple changes to keep power-hungry appliances turned off between 4pm-7pm. Lots of people don’t even get home from work till 7pm, so they would benefit on this tariff without changing their behaviour.
Something we find just as exciting are the changes that happened in people’s minds when they were given this information via the user-friendly app we designed.
The fact that energy costs more at different times of day is a ‘hidden truth’ of the energy industry. By having one cost of energy throughout the day, those who use a lot at the peak time are subsidised by those that are not and we don’t think this is fair.
Revealing this truth to people made them feel empowered to make a choice over when to use electricity. One of our trial members, David in Hucknall, played this back to us by talking about trains. He explained that as a retiree he would not choose to travel on a train at peak time as he had the choice to pay less at another time. Electricity is no different. We want to give people the choice to save money if it suits them, without penalising them if they are not able to.
A tariff fit for the future
Each month, there are almost 5000 new electric vehicles (EV) registered in the UK, and most of those will be charged at home. If everyone came home from work at 6pm and plugged in their car we would start to see an unsustainable increase of demand at a time that the National Grid is already under stress.
To supply these peaks the Grid would likely turn to non-renewable sources. This means electricity from gas-guzzling power plants would be pumped into those clean emission vehicles. This makes no sense.
Our trial included members that drive EV’s and we do a lot of research with these motoring pioneers. We know that offering a tariff with a cheap overnight rate makes a lot of sense. It keeps the motoring costs of EV drivers down, encouraging an uptake of EV’s. This can only be a good thing. And it ensures we keep the grid as renewable as we can.
Our 3-rate tariff has been priced in such a way that an average EV driver in London, driving a Nissan Leaf and charging 3-4 times a week, could save almost 30% (around £350) on their electricity bill vs. our standard, variable tariff. A cheap Overnight rate was something previously only open to people on Economy 7 and now anyone with a smart meter can access this.
We know for real it’s really good
We think that our smart tariff is pretty exciting but in the Labs team we’re especially excited to have it tested and informed by real members living their real lives. We will continue to build a minimum viable product of our future products and services and make sure we don’t build anything that hasn’t been properly co-designed with our members. Find out more about Bulb Labs, and how you can take part.