PS23417 - Time of Use Tariff - Consultancy

*****Future Opportunity****

Brief Description of Requirement

1. Purpose of document

This document sets out the requirements for external technical expertise on stakeholder engagement on preferred options for exchanging interoperable energy tariff information. As per the "Delivering a smart and secure electricity system: the interoperability and cyber security of energy smart appliances and remote load control" consultation , appliances like electric vehicle charge points and heat pumps have high potential to provide flexibility through Demand Side Response (DSR). While they will increase demand for electricity, these appliances and others can deliver DSR by changing when electricity is used or produced, to minimise their impact on the energy system. As markets for such appliances continue to grow, new business models and services will emerge whereby companies remotely manage consumers' energy smart appliances according to consumer preferences, to reduce impact on the energy system and subsequently reduce consumer bills. In addition, appliances will be able to optimise energy usage, while also ensuring consumers' needs are met. For example, an electric vehicle smart charge point can be programmed to ensure that a consumer's car is charged when they need it, but it can also optimise when the car charges to minimise the energy system impact. This will allow DSR to be delivered 'behind the scenes' for consumers, ensuring they still get the same or better service but at lower costs and while retaining choice and control.

We are seeing some of these services coming to market now. For example, EV owners can subscribe to services where they get discounts, rewards or cash-back for letting a third party dynamically control when their car is charged. Some energy suppliers are offering sophisticated time-of-use tariffs that change the price of energy depending on when it is used. Whilst these services are not being offered on a large scale now, the scale of uptake in DSR and ESAs by domestic and small non-domestic consumers has the potential to increase significantly in the future.

However, there are currently barriers to the growth of this sector. Not all tariffs and services are available for all devices, and there are limited consumer protections to build confidence in the market. To ensure we are prepared for the future, the Government is proposing to implement measures to ensure domestic consumers who choose to use DSR services, are able to get the most benefits from doing so, irrespective of the kind of smart appliance and service they choose. These will also help address the current barriers and market failures that prevent more UK businesses from maximising the potential of DSR for their own growth and for the wider economy.

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