When blackout warnings hit, Britain paid households to cut peak-time power use

In October 2022 National Grid warned that homes could face three-hour rolling blackouts over winter if Britain could not secure enough gas and electricity imports as demand rose. The grid operator’s answer was the Demand Flexibility Service, open to all energy suppliers and set to run from November 2022 to March 2023: instead of cutting off whole chunks of the country, pay people for using less at peak. About 14 million British households already had electricity smart meters, the base the scheme needed.

The mechanics were simple. Customers receive an email or text a day ahead naming the time slot — usually between 4pm and 7pm — when they would be paid to reduce use. Those who cut back versus their own recent average consumption earn £3–6 per kilowatt-hour saved, set higher on days when the shortfall was severe; some customers might get as much as £10 a day. Octopus Energy, which trialled the scheme in February and March, expected around £4 per response and roughly £100 per household over the winter, with about 25 paid event days.

Octopus chief executive Greg Jackson framed the trade: “Instead of cutting off whole chunks of the country if we are short of gas, we can reward people for using less energy at times of peak demand” — every unit saved also spares the system’s expensive standby diesel and coal. Downing Street had ruled out a government campaign to persuade households to consume less, but the market route went ahead. Trial participants saved an average of 0.7 kWh each; Julie Byrne of Saffron Walden hung towels outdoors and postponed dinner: “It wasn’t just the money. I felt I was helping.”

The system was already paying a fortune to keep diesel and coal generation on standby; paying users a bit less than that for real reductions is cheaper.

The smart-meter baseline makes each household's reduction individually verifiable, so payments track genuine behavior rather than promises.

Small rewards work because people already respond to small savings — Jackson compared it to shoppers buying reduced-to-clear items for under a pound.

Day-ahead windows concentrate the incentive on genuine shortfall periods instead of flattening demand all the time.

When supply is short, the cheapest megawatt is the one never used: paying many small users against their own metered baseline turns conservation into a market instead of an edict.

The service was set to run until March 2023, with Octopus predicting around 25 paid event days over the six months and compensation rates likely to rise on the most severe days. Whether it would keep the lights on without rolling blackouts was not yet known when the details were announced.