Tempus Energy launch demand side responce unit to help homeowners save 20% on energy bills

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This is everything that smart meters should be...

A new hi-tech way that is said to cut energy bills by up to a fifth is about to go on the market. The idea is that a “black box” will turn appliances, such as fridges, on and off in response to fluctuations in the wholesale price of electricity, which occur continuously throughout the day, reports the Telegraph.

The devices will be offered to households later this next month by a new firm, Tempus Energy, which claims that customers will be able to save 20pc on their electricity bills by using so-called “demand response” technology that remotely manages their home appliances.

The black boxes are installed in the customer’s home and communicate with “smart” appliances such as dishwashers and storage heaters. The boxes receive instructions from the energy company, which uses complex technology to trade wholesale energy during the day. These prices change on a half-hourly basis.

For example, when energy is at its cheapest, the company’s computer system sends a message to each black box instructing it to switch on people’s appliances. At times of peak energy use, wholesale electricity costs more and the black box is told to switch householders’ devices off. For example, a fridge-freezer may be temporarily turned off in order to cut costs.

Tempus Energy claimed that its technology could cut the average energy bill, currently £1,265 a year, by more than £250.

“Smart” appliances, such as dishwashers and washing machines, that can be hooked up to a mobile phone, are already available in homes. Currently, they can be switched on and off remotely using a customer’s smartphone. The black box technology acts like the smartphone system but turns on the devices when electricity is at its cheapest.

As far as the bill payer is concerned, all he or she needs to do is to prepare, by making sure the dishwasher or washing machine is ready to go before bedtime, for example.

But could your television be automatically switched off during peak viewing hours? Tempus Energy says no. Certain tasks, such as making a cup of tea or watching a television programme, are “time-sensitive” and, therefore, cannot be switched off.

How do I sign up?

The roll-out will begin with heating and water. The first Tempus Energy domestic customers must have storage heating, which is used by 10pc of British householders. The heaters switch on automatically during the night, storing heat using cheap off-peak electricity and releasing it slowly to keep the house warm or to supply hot water during the day.

Currently, customers with an off-peak “Economy 7” tariff get the energy they use between 11pm and 6am for around a third of the cost at peak time. The catch is that the energy they use during the day is far more expensive than it would be on an ordinary tariff.

But consumer watchdogs have previously voiced concerns over peak and off-peak tariffs, which are a focus of customer complaints.

A spokesman for consumer group Citizens Advice warned that variable pricing added to an already complex mix of energy products.

“It should contribute to an effective, low-cost energy supply, rather than becoming an added headache for domestic consumers,” a spokesman said.

However, all energy suppliers will soon sell power at peak and off-peak prices, according to experts.

The new options are likely to take the form of cheaper weekend tariffs and more expensive evening costs, according to uSwitch, the comparison website. “It is unlikely that the first products will be based on half-hourly usage,” a spokesman said.

An 'extreme' lifestyle change

Citizens Advice warned that some of the lifestyle adaptations needed to make the most of variable electricity costs could be “extreme”, such as ironing at night or cooking a meal in the small hours of the morning.

Sara Bell, the head of Tempus Energy, said that her firm’s technology would eliminate these aspects of peak and off-peak pricing by giving customers a simple anytime tariff.

Whereas previously customers would need to set their dishwasher or heater on a timer, the black box would do this automatically.

But Ms Bell, who founded the company two years ago, said: “Everyone always has the right to override this. It’s about customers managing to get the lowest possible bill.

She said that customers who overrode the black box’s instructions and switched their appliances on during peak time would not pay higher prices.

“If we’ve done our job well, we’re understanding customers’ flexibility and delivering what the customer wants. As long as you have the right mix of customers who share flexibility, in time it will be open to all customers,” she said.

The technology should also help reduce fears of winter blackouts caused by high demand for energy by cutting down people’s peak-time energy use, Ms Bell said.

“We should be encouraging people to move away from peak-time energy use. At the moment it just keeps pushing up bills for everyone.” She claimed that off‑peak use would cost customers 2p per kilowatt hour, as opposed to the typical cost of 10p.

Could we get paid to use the dishwasher one day?

It will take more advanced technology, which has the capacity to store electricity for later use, for the black box to control every device in the home.

But in future people could be “paid” to use their dishwasher and washing machine during periods of surplus energy, Tempus Energy predicted.

Currently, in countries where there is high renewable energy generation, electricity can cost “less than zero”. On a windy day in Germany or Denmark, for example, wind farms generate surplus electricity and the wholesale price goes negative.

But Tempus Energy’s claims do not add up, according to Steve Thomas, professor of energy policy at Greenwich University.

“If it passes low prices on to consumers, logically it must pass high prices on as well, so it still doesn’t make sense,” Prof Thomas said, describing the prospect of free electricity as “mere speculation”.

“I don’t see how this could turn into negative consumer prices because you still have to pay the network charges and the retailers’ charges,” he said.

Such additional charges make up 45pc of the typical electricity bill, with the rest determined by wholesale costs.

The system would also be counterproductive if too many people switched on during periods of cheaper prices, said Prof Thomas. “If lots of appliances switch on at the same time, prices could go up, so it’s counterproductive.”

However, peak and off-peak tariffs such as Economy 7 are “Neanderthal” and need improvement, he said. “The tariff has now created a huge peak at 11pm when appliances automatically turn on.

“But you can’t get up at four in the morning to eat your dinner. For domestic users there will always be a limit to how much of your demand is ‘postponable’.”