A debate on marginal pricing and incentives to move energy usage to weekday off peak times

Hi @SunnySideUp 

I think that what you are getting from solar reduces your off-peak usage, which then affects your Power Move percentage.

You should have done the large oven baking on a weekday, outside of 4-7 of course.

That way it would have counted in Power Move as weekday usage outside 4-7, thus offsetting and so reducing the percentage used within 4-7.

Usage at weekend and Bank Holidays doesn’t count in Power Move.

I normally bake small things like biscuits, bread rolls/buns, and yes I’m planning some mince pasties (as a change from pies), in the Air Fryer now.
It uses less energy because the baking times are reduced and of course it’s smaller so doesn’t take as much energy to get to temperature. (I don’t even bother to pre-heat it).
Of course being smaller you may have to bake in batches but you still win out overall.
I’ll also do pastry crusts in the AF and drop them on top of microwaved stews, etc.

Larger things like full loaves or larger cakes do still go in the electric oven, but on a weekday where the energy used will count towards Power Move as off-peak usage so in your favour.

I agree with @Nukecad above but the whole thing is confusing if you don't understand the aim and the underlying mathematics behind the Power Move so here are two simple rules that I stick to and I'm well on track for my third £15 payment.

For the sake of your finances take care to reduce your usage of electricity, particularly a lot of low wattage devices that are on all the time and don't need to be on all the time. Even an internet router can take 10W if it's an old model. TV masthead amplifier is another one which is often forgotten. And there will be others. If you have a smart meter with an In House Display then track these vampires down so that you are at least aware of them.

If you have any heavy duty loads, oven, washing machine, tumble drier etc make sure the are ONLY used WEEKDAY and OUTSIDE the PEAK. Sorry for the caps but both of those conditions are absolutely essential to make your In-Peak usage look small by comparison to fit under the 13.5% threshold. Heavy duty usage at the weekend is not your friend. Heavy weekend usage does not help make the peak, weekday usage look smaller because it is not included in the calculations.

You may not agree with the way this scheme is set up but it a case of the Golden Rule. Thems with the gold makes the rules.

Happy vampire hunting and load shifting.

There are two reasons why you shouldn’t consider turning off your internet router:

The first is general for anybody - If you keep turning your router off and on then the monitoring software at your supplier thinks there is a fault on the line that is cutting the connection.
So it ‘throttles’ (slows down) your broadband to try and compensate for the ‘fault’.

Second is for Power Move - If your router is on 24/7 then its using the same wattage off-peak as on-peak, which is 21 hours outside Power Move hours and only 3 hours inside them.
That’s 12.5% so  doesn’t affect Power move that much at all, you can think of such constant background usage as being neutral for Power Move.
Generally if it is on all then time then you can forget about it for Power Move.
The same goes for fridges which are on constantly, but not quite for cental heating pumps because most people have those on timers which are switched off for several hours overnight so that’s not the same as being on 24/7.

PS. Wifi routers use the same power whether anything is connected to them or not. they still send out wireless signals all the time which uses the same power whatever that wireless signal is carrying.
Whether it’s streaming a film or just asking ‘I’m here does anything want to connect’ the routers wireless signal uses the same power.

Being honest, if you are down to trying to save 10 watts here and 10 watts there to meet the Power Move target then I’d suggest that you are not going to do it. andthat Power Move may not be for you.

@Nukecad

Thank you. I should have made that a bit clearer in that it wasn't a suggestion that you turn the router on and off. It was the point that there are a lot of devices around the house that can take a significant amount of energy over a year when switched on 24/7 and maybe you don't give them a second thought. Go and have the vampire hunt.

As a side issue I have an EE router that is switched off daily between 12 midnight and 5am. This has two effects. It saves a bit of energy when nothing is using it and secondly it gets a reboot every morning and this has fixed one of the issues I have with the legacy Orange (remember them) software that is incorporated into these devices. Namely, after a few days they can go dumb and they need a reboot anyway. I don't have any issues with my ISP thinking that there is a fault with the line and reducing my download speed. It is possible that other ISPs may react differently but generally routers measure the signal to noise ratio (SNR) second by second and adjust the speed accordingly.

BTW: Switching the router off when off peak actually works against me achieving my taget but I pass with a sufficient margin that retaining this practice is still ok and it saves a small amount of power as well.

I understand why people are suggesting moving heavy duty loads from weekend to weekdays to achieve a benefit from these schemes. However, weekend electricity generations is almost always ’greener’ than weekdays so this is backfiring on anyone wanting to help achieve lower emissions.☹️🌍

@juliamc You're absolutely right. It's a choice between greener or cheaper for most of the time and you have to make a choice between them.

I am running a 24 yo gravity boiler (non-condensing) that is still going strong. To change to a condensing boiler that is 15% more efficient I would have to spend £3-4k for a boiler and a large amount of disruptive plumbing which will take about 20 years to pay back with the increased efficiency and will only last about 15 years on average.

I looked at a heat pump, paid for a survey and the quote came back at a staggering £16k! £8.5k after the £7.5k HP grant with even more plumbing changes.

The path to being green is fraught with financial challenges. I don't see it going particularly well myself.

Hey @juliamc and @Peter E,

It’s a good point you’ve made and I've fed this back to the team. OVO are always assessing the impact of Power Move and looking at new ways to iterate in order to maximise the positive environmental impact and the customer experience. It may be that the proposition is adapted in the future to try and overcome this obstacle. 

I’ll keep you posted if I hear any more updates about this issue 😊

Thank you @Emmanuelle_OVO  for offering to do that but the issue goes back further than Ovo into the way the electricity supply industry is set up with Marginal Pricing, investments and back to people again.

This is my understanding of the situation - please correct me if I’m wrong – on any of this. There are simplifications and generalisations in here as well.

Marginal pricing means that all the cheapest possible sources of electricity will be used, and the wholesale electricity price will be set by the price of the last selected offer, to meet demand.

This means at peak demand, when the most expensive power source is being used (possibly coal) all of the power supplied to Ovo and other operators will be that of the most expensive source. Ovo has to pay the marginal price and has to sell at the tariff. They make a profit off-peak and a loss at peak times. To cut the loss at peak times they offer an incentive to customers to reduce their peak demand thereby reducing their loss and rewarding the customer for meeting the criteria for doing that.

The peak demand at the weekend is nothing like as big so the losses to Ovo are somewhat reduced and may not exist at all. There is no financial reason why Ovo (or other companies) to offer an incentive for including weekends. The fundamental issue is the setup of the electricity production market is based on marginal pricing.

My further understanding is that since the recent massive increase in fuel prices it has been recognised that the model for wholesale prices based on marginal pricing is broken (extremely costly to the user) and needs to be fixed. However, the contracts for renewable energy were let on this premise and they will run for some considerable period of time before they expire thereby baking he problem in.

So why were the renewable generators offered a contract based on the marginal price model in the first place?

Because they can print money like it is going out of fashion, at the peak, on a freezing but windy day. The prospect of this, in turn, gives investors the reason to fund the renewables in the first place. Without the high returns investors will look elsewhere. No ‘print money’ contract no renewables investment. So it comes down to funding investments in renewables where there is more of a focus on the green credentials and less on the rate of return. Since peoples’ occupational pension funds make up a sizeable proportion of investments it means people advising their pension investment managers that you will accept the risk of a lower pension in return for investing in green projects. Without guidance pension fund managers are duty bound to maximise returns. You can see one of the problems right there but I believe that ethical investing is increasing. But we are stuck where we are at the moment.

My apologies for the long read but the move to a greener future is not going to be without cost and it is going to take time. I think Ovo have done well to introduce the Power Move scheme although it doesn’t work for everybody but the winter scheme is more flexible and should be more inclusive without making it too complex.

Peter

It varies a lot, Julia, as you well know. It’s quite possible that a load of washing done on Sunday evening will generate more CO₂ than the same load done on Monday morning. Those really keen to minimize their CO₂ emissions should keep an eye on, say, ESO’s forecast regardless of the attraction of the PM prize. One thing is pretty certain, though: a load of washing (or, God forfend, tumble-drying) done during the night will be greener than one done during the day.

That’s a fairly simple decision. When to bake or hoover is trickier, but the same applies. Even if 6AM or 10PM are out of the question for this sort of activity, it’s still possible to time them for minimal CO₂ impact during the week. So I can’t see shifting usage from weekends to weekdays as inherently anti-social, and if it pays my standing charge, I’ll keep on doing it 😊   

I suppose the ultimate is to go with Octopus Agile - it looks like they’ll pay customers to use electricity in the small hours tonight (graph from www.energy-stats.uk)

Car plugged in ready for a 3 hour burst tonight, costing 9p p kWh for my tariff.

Yes. Ovo’s Power Move is a small step into the wholesale market with no risk. If you know what you are doing and can avoid peak prices then Octopus Agile does work well for those who can be flexible with their demand.

After my piece above about Marginal Pricing above I found a very good source of information on that and what could be used to replace what is now considered to be a broken system of pricing electricity. It comes from a company called Squeaky and they are all (mostly) quick reads of a few minutes. You can get the background on Marginal Pricing by scrolling down to the March 2, 2023 article and go from there.

https://www.squeaky.energy/blog

Peter

Sometimes l find it hard as well. l did hit target for the odd hours that seems to be easier. but during the week is harder. l do try using different appliances either early on in day. or later after seven. their is just the two of us. it did say l might be on track to hit target next month. but we have to wait and see.

Great debate this, as promised, made into a new thread!

I think that once all the ‘tech’ is in place, it will be easier for anyone wanting to use a variable or ‘time of use’ (ToU) tariff. 
The general overall pricing of the wholesale market does need a review but as I’ve mentioned elsewhere, we use the Agile tariff and our solar PV /battery control can choose its own ‘best’ slots for pricing meaning that during our last charging cycle, our average cost per kWh was 13.9p and had very low carbon emissions. 
Talking this through with a number of people, they expressed concern as some headline costs per kWh are 40 - 60p but that’s the whole point. During those highest costed times, the grid is often more polluting and so if there is a good degree of automation for the newer technologies, I think many more would be encouraged to move towards ToU, help reduce emissions and save money too

I actually use very little electricity often only 0.3 half hourly. If for some reason I haven

t been able to drop it during peak times which isn’t often I boil a couple of dull kettles or at 8pm put the weekly wash on & that allows me to reach the goal. I have found that although its supposed to be 4 - 7, its really 3.30 - 7.30

The end game may need more control like we see with Octopus Intelligent and OVO Anytime or the load control features in our smart meter. Here there is a level of central control either via individual suppliers or ultimately country wide.

The danger with Agile is you reach a tipping point at some individual sub stations or nodes where they get overloaded with customers with their own  tech all competing for cheap slots. 

We are not there yet, but we already have individual substations where peak load is overnight due to home battery and EV concentration in relatively affuent households. This then potentially hits an infrastructure limit when the next household asks to install an EV charger.

I find it difficult to judge how quickly things will move. Circa 4% of households have solar and some of these will be very small setups on new builds or poorly oriented panels. It is difficult to know how many homes will actually have home batteries in say 10 years, a couple of percent? A lot more? How many homes will have EV setups where the EV battery can be used to power the home in 10 years?

Are there any plans to mandate solar, batteries in new homes?

It is going to be an interesting couple of decades. 

Firstly, Merry Christmas and Happy New Year to all forum members.

Lots of great views on this topic which could run and run. Simplistically, however this scheme is not a "one size fits all" opportunity although it warms the cockles that all demographics are trying! Even if you fail in hitting the target you are actually making a contribution so you can pat yourselves on the back for that!

As far as I have observed most comments about non-achievability seem to suffer the same problem of  already low off peak usage, either due to the house being empty through work commitment or by having supplementary power sources as mentioned in many posts. I would be very interested in some statistics showing just how much peak time energy has been switched from the inception of these schemes and just how many customers have hit target. Are OVO going to publish these figures?

However, I am more concerned with the January  OFGEM price cap rise which has wiped out any rewards I have gained from Power Move in the past three months! Even more concerned that the cap will continue to rise unless the Gaza situation is resolved pretty sharply.

The timings are pretty precise, governed by the internal clock in your meter*. The quantity of energy passing through the meter is counted, on modern meters in watt-hours, and every 30 minutes, the sum is transmitted to DCC. Once a day, OVO collects the 48 half-hourly figures for each smart meter and records them on the appropriate account. So for Power Move, the quantity measured is exactly what passed through your meter between 16:00:00.000 and 18:59:99.999. Anything before or after that period isn’t included.

What makes you think ‘it’s really 3.30 - 7.30’?
  

*   Most meters these days have two clocks. One works while there is power to the meter, and it just uses the frequency of the supply to keep time. Electricity distributors work very hard to make sure that the frequency is 50 cycles per second (50 Hz) all the time. The other is the same sort of quartz crystal clock that you probably have hanging on your kitchen wall. This one just makes sure the meter knows what time it is when the power comes back on. 

That may well happen, but it’s notoriously difficult to make predictions, especially about the future. One company that tries, usually quite successfully, is Cornwall Insights. You can see their latest price cap forecast (just over a week old) here: Predictions and Insights into the Default Tariff Cap (cornwall-insight.com) 

First of all a thank you to @Tim_OVO  for taking my meanderings on Marginal Pricing and making an appropriate thread for it. Warning: more, long-winded meanderings ahead but with the promise that it will give you a chance you think what opportunities could lie ahead in the future.

From the (squeaky energy) link I gave above I think it is very obvious that the pricing system for electricity in the UK is incredibly complex. Not only involving the introduction of intermittent, large-scale green energy generation but also trying to fit that into traditional financial instruments used to match supply to demand and also incorporate investment. I think there are a lot of people tearing their hair out trying to manage this, however, this does generate new possibilities and opportunities because it is obvious there are times when energy will be plentiful and cheap and other times when it won’t. Take an old saying ‘Make hay when the sun shines’ and turn it into ‘Make steel when the wind blows.’

The Demand Side market can be based on either constant cost (Retail) or variable cost (Wholesale). Retail is where you have a constant cost per unit 24/7 all year round. The job of the energy supplier is to calculate a tariff where they can make a profit at low cost times to balance out the losses during the peak and still stay in business. Wholesale is where you buy electricity by the half hour (HH) at a variable price which some people know as ‘Agile’. If you can forego using power during the peak then you can pick up very cheap or even negatively priced electricity at other times. There are some customers who have a relatively low usage and want the comfort of a constant price and where wholesale prices wouldn’t suit them anyway or would be risky. There are other customers who understand how to calculate their total cost for the year (an HH Convolution**) based on variable pricing and can be flexible with their usage and also understand and can mitigate the risks.

I think the opportunity exists for utilities to offer a range of products from Full Retail to Full Wholesale to suit different customers. At the moment you have to shop around different utilities to find the one that matches your needs but what if this was available within one company? There has been a radical departure from traditional energy generation as recent as 2012 when nearly 50% of our power generation was coal. I think the utilities have to make a similar move or get left behind. Where their expertise comes in is that they can easily calculate a customer HH Convolution using historic pricing and their individual usage and suggest a product that best meets their needs in terms of cost and risk. The benefit for the utility is that the more customers that take up wholesale prices then the lower risk they have in return and can offer a lower price. Perhaps Ofgem would prohibit this to start with for some reason but they, in turn, have to evolve their restrictions where they prevent a customer from getting a balanced cost/risk with their utility. I think we have an incredibly interesting future for power supply and usage in this country and I don’t think it can be denied by anyone that flexibility is the going to be a key word in the future.

A personal take on this

Since this discussion kicked off a while ago about people who were saying they were finding it difficult to meet the requirements of Power Move, I offered some advice, as did others and I hope it proved to be useful to some. I then realised that Power Move was actually a zero risk, first step into the Wholesale Market. Having realised that I did an HH Convolution (easy for me) with my historic usage against an ‘Agile’ product and found that my in-house electricity cost came out at about the same but I could approximately halve my £800 bill to charge my car for the year (10,000 miles). You could say, why don’t I use the Charge Anytime add-on but neither my car nor charge point are compatible and I won’t be changing either in the near future. What is more, I don’t even need to change anything; the way I use electricity in-house (my partner will be pleased with that) or the way I charge the car except I’ve noticed there is a trend (as a by-product of the HH Convolution) for when to best start charging the car at night depending on the month.

If you got to this point I congratulate you on your stamina (or perhaps you ran out of other things to read over Christmas) and I hope it has given you some thoughts on how things could change and perhaps at some point in the future the ultimate lowest cost supply can be secured with a personalised plan from your energy supplier tailored to your specific needs. Two things are happening for certain. We will have to be more flexible with our power usage with increasing intermittent generation capacity and if utilities want to retain customers then this flexibility has to come with access to lower priced, green energy.

Wishing you a Happy 2024

Peter

 ** An HH Convolution – There are 17,500 ish half hour periods in a year. A convolution is multiplying two sets of numbers together so, for each of the ~17,500 HH periods, you multiply the power used by the price for that half hour and add them all together for the total cost for the year. Easy for those with the usage and pricing data and a spreadsheet. Impossible otherwise.

@Peter E

A few 3rd parties attempted to develop tools to take all the 30min data they could get from a customers smart meters to attempt to work out the best tariff across the whole market, but a lack of tariff after the Ukraine conflict I suspect stalled the effort.

For example Bright/Glowmarkt

https://smarttariffsmartcomparison.org/home

In theory the faster switching service would make this sort of tool great.

Although things like OVO Anytime would be messy for 3rd parties as the smart meter doesn't store the EV charge saving.

Every month on the billing emails from ovo, customers are told what the best tariff is for them, although I assume this isn't clever enough to look at tariff like OVO Anytime.

Putting things into - also historical - perspective, this page has a wealth of pertinent data: Energy (spectator.co.uk). Worth taking a peek now and then.

One issue I have is compatibility. We have existing solar under the 2015 FiT scheme, and batteries bought 18 months ago.

Suppliers want you to fit their panels, batteries and control system to be able to use them with their TOU tariffs. 

Same with electric cars - early owners find their cars or chargers are not compatible with the best TOU tariffs. 

I quite like the ‘make do and mend feel’ and have enjoyed hunkering down with a good book and flask, and watch programmes on my pre charged laptop. We have it down to a fine art of boiling the kettle to fill a litre flask with hot water and use our high powered battery operated torch in the kitchen as our spotlights are power hungry. I don’t find it tedious or depressing but rather it reminds me of my childhood and is quite comforting.