The encyclopedia · Product & Design · Financial decision · 2018–2023
Octopus Energy's Agile tariff pays customers when wholesale power prices go negative
Instead of smoothing prices, Octopus reflects them every half hour — so households profit from wind and shift use off the evening peak.
Octopus Energy
the move
In February 2018 Octopus Energy launched Agile, which founder and CEO Greg Jackson called groundbreaking: instead of a flat tariff, it tracks wholesale electricity prices so customers can benefit when supply exceeds demand and prices 'go negative'.
The mechanics: half-hourly rates tied to wholesale and updated daily, requiring a smart meter, with a formula that marks up wholesale by a distribution coefficient plus a small peak premium, capped at 100p/kWh including VAT. Octopus reported a -10.08p/kWh rate at 3am on 3 January 2022 — paying customers to consume.
The model proved itself in Britain's 2023 demand-flexibility scheme: on one evening more than 400,000 Octopus customers were paid over £1m for cutting usage between 4.30pm and 6pm, with the average customer earning £2.50 for a 60% reduction.
why it works
- Real prices give households a reason to shift demand.
- Smart meters make half-hourly billing possible.
- Negative prices turn wind surplus into customer income.
- The cap protects households from price spikes.
what transfers
When customer behavior is your flexible asset, stop flattening prices: expose the half-hourly cost and households shift demand themselves — margin and a smarter grid follow.
what came after
Agile became the reference point for dynamic time-of-use tariffs in the UK; Octopus later added an export version (Agile Outgoing) and used the same smart-meter data to run National Grid demand-flexibility payments for its customers.
references
- Energy company promises to pay customers to use electricity
- Agile pricing explained
- £1m paid to Octopus Energy customers as part of power saving scheme
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