Comment by Tom Luff, Practice Manager (Electricity Markets & Policy), and Francesca Davey, Graduate Energy Analyst at Energy Systems Catapult.

Energy use in our homes is changing. Think, electric vehicles, heat pumps, solar panels, and batteries. These low-carbon systems are an important piece of the Net Zero puzzle, but they also risk putting extra pressure on our electricity grid as we move away from gas.

Flexibility offers us a win-win solution – energy bill savings for consumers and support for grid balancing. Flex isn’t complicated. Households are encouraged to shift their electricity use to times when there is low demand. Several trials have been run to see whether this is something that households are willing to do, such as NESO’s CrowdFlex.

The consumer challenge

Yet, many households find traditional flex periods impractical. Let’s face it, changing when you cook, shower, or relax just to save a few pence isn’t practical for most. Many families simply can’t rearrange their lives around energy pricing, leaving them stuck with expensive tariffs. We need solutions to be designed for the people that use them and avoid imposing flex that is disruptive and exclusionary.

The big idea

What if we separated flexible energy use from everyday consumption? Imagine your EV charging at times when energy is cheapest, using dynamic pricing, while the rest of your home stays on a straightforward, flat rate. This approach means you could take advantage of lower rates for EV charging without rearranging your daily schedule.

What we want to find out

Energy Systems Catapult is studying whether it is feasible and desirable for households to have a second energy supplier that could be dedicated to specific assets, like EVs.

Households would be able to plug in their EVs, with automated smart charging to match low demand, low pricing periods, saving them money whilst helping to balance the grid, all without having to change what they do and when in their homes.

Some suppliers offer special tariffs for heat pumps and EVs already, think Octopus Go and OVO’s Heat Pump Plus. These tariffs offer cheaper rates for the asset’s electricity use during off-peak hours. Innovation in this space is welcome, but how these tariffs are set up and administered can result in convoluted charging methodologies (e.g. charging all electricity at their standard rate, then crediting the homeowner the difference for electricity used by the asset) to navigate the regulations.

We want to explore if changing the regulations could unlock greater opportunities for flexibility: separating EV charging from the rest of the household’s energy use could allow for more dynamic pricing – such as very high peak prices and extremely low off-peak rates – without compromising less flexible household loads like cooking and lighting.

We’re also interested in whether regulatory change could open the market to new players, and increase competition to develop innovative customer-centric propositions.

A study in 2021 concluded that while the conditions weren’t right for change then, revisiting such change would be sensible. We want to know if this change could unlock innovative business retail offerings, new energy savings potential for households, and reduce grid constraints – as well as exploring whether it could have negative consequences and if so, how these could be mitigated.

We’re using our Living Lab and Whole Energy Systems Accelerator (WESA) capabilities to simulate the real-world experience of living with a secondary supplier and understand the impact on consumers and the market. Using real energy consumption data to create simulated billing models, we’re testing four billing propositions:

• A traditional single supplier with a flat tariff (as a control comparison)
• A primary and secondary supplier arrangement, where EV energy is priced dynamically, and the rest of the home energy is on a flat rate.
• A primary and bundled secondary supplier proposition, combining EV energy costs with vehicle leasing, insurance, and out-of-home charging, and a flat rate tariff for the home.
• A community energy model, offering cheaper EV tariffs when local renewable generation is available.

Participants from the Living Lab will be interviewed about the four propositions using simulated bills generated by the WESA billing simulator. These bills will be generated based on the participant’s real smart meter and EV charging data, reflecting actual energy usage to create realistic bills. By evaluating the different bill propositions, we want to know if the offer appeals to them and if they would be willing to buy their energy in this way.

What the results could mean

As our homes become more electrified, finding smarter, more flexible ways to use energy is critical. Early signs show that many consumers are open to letting go of some control over EV charging if it means saving money. If separating EV charging from the rest of your household’s energy can reduce costs and ease grid strain, it could pave the way for more innovative and customer-friendly energy solutions. Our hope is that these findings will encourage policy makers and industry players to explore new retail models that truly work for everyday people.

We’d love to hear your thoughts on this approach, drop us a line and join the conversation!