Households are being offered £10 a day to cut electric usage at peak times in a bid to avoid winter blackouts.
The deal relies however on smart meters which are unreliable and have been installed in around only half of homes and small businesses.
National Grid on Thursday issued a dramatic warning that gas shortages could lead to three-hour power cuts in some areas. Customers would be warned in advance of the blackouts which are likely to occur in the morning peak or between 4pm and 7pm.
A move to implement power cuts would need approval from the Government and King Charles, who would need to sign off an emergency Privy Council order.
The warnings comes as Prime Minister Liz Truss has claimed UK ‘can get through the winter’ and has ‘good energy supplies.’ However, she stopped short of explicitly offering a guarantee of no blackouts, in response to concerns from the body that oversees Britain’s electricity grid.
The number of homes left without electricity would depend on how many power plants need to be shut down because of gas shortages. The warning will spark memories of the 1970s, when strikes by coal miners forced Ted Heath’s Tory government to introduce blackouts and a three-day week.
National Grid’s plans are based on a worst-case scenario of the UK receiving no imports of electricity from continental Europe this winter alongside a shortage of gas.
Prime Minister Liz Truss meets with Prime Minister of the Czech Republic
Households are being offered £10 a day to cut electric usage at peak times in a bid to avoid winter blackouts (stock image)
How hard-up middle class shoppers feeling the pinch are snapping up blankets and one-pot stoves to save on energy costs this winter
Hard-up middle-class shoppers are buying heated throws, air fryers and one-pot cookers to avoid soaring energy bills.
Shopping trends by Lakeland show sales of Remoskas, the portable electric oven, are up 54 per cent this year compared to 2021, while sales of heated throws have almost doubled and washing lines are up by 17 per cent.
Some people are also getting creative to cut costs at the same time as trying to cook more healthily, as sales of air fryers are up 51 per cent.
There may also be fewer gifts under the tree at Christmas after 55 per cent of the 3,000 people questioned said they would give less to save cash.
But despite its findings, four of the top ten Christmas gifts Lakeland recommended were over £100 with the most expensive – a 6.5l stand mixer – costing £299.99.
This was followed by an Ooni Karu 12 multi-fuel pizza oven (£299), a SodaStream Art Megapack (£149.99) and a Lakeland digital espresso maker (£129.99).
Lockdown hobbies have also taken a dive compared to last year, analysis showed, with sales of pasta makers down by 38 per cent as people head back out to eat.
Demand for yoghurt making and jam making kits has dropped by 13 and 5 per cent respectively.
Despite this, the Covid craze for pizza ovens has continued after a boiling summer, and the survey suggests they are becoming more popular than barbecues.
About 66 per cent of people with a pizza oven say they use it at least once a week, compared with only 21 of people saying the same about a barbecue.
In what it called an ‘unlikely’ scenario, the National Grid Electricity System Operator (ESO) said that households and businesses might face planned three-hour outages to ensure that the grid does not collapse.
Planned blackouts hit the UK during the 1970s in response to the miners’ strikes and the oil crisis.
There have also been major unplanned outages during storms, including in 1987 when more than 1.5 million people were left in the dark.
But the lights will stay on this winter unless the gas-fired power plants that produced 43 per cent of Britain’s electricity over the last year cannot get enough gas to continue operating.
It is the most dire of three possible scenarios that the ESO laid out on Thursday for how Britain’s electricity grid might cope with the worst global energy crisis for decades.
In the other two scenarios, the operator hopes that by paying people to charge their electric cars at off-peak times, and firing up back-up coal plants, it can offset the risk of blackouts.
Households will be encouraged to sign up to a ‘demand flexibility service’ that rewards them for using off-peak electricity. They could be paid over £10 a day for taking measures such as running appliances at night.
The figure might be higher for owners of electric vehicles who avoid peak-time charging. The money will be credited to bills.
The scheme depends on smart meters that automatically send readings to suppliers. Some 29.5million have been fitted in homes and small businesses.
The devices have been dogged by complaints, ranging from outright malfunctions to inaccurate readings that lead to inflated bills.
Hundreds of thousands of households are unable to get one because they live in high-rise flats, old properties with thick walls, or remote regions with poor signals.
Joe Malinowski, founder of price comparison service The Energy Shop, said: ‘Generally time-of-use tariffs are a good idea but there are serious questions to be asked around the logistics and whether smart meters are equipped to measure energy usage accurately.
‘We know there are problems – my own meter is not feeding data accurately back to my account.’
Former Tory leader Sir Iain Duncan Smith called for a rethink: ‘It seems cynical to me that only people with smart meters can benefit.
‘If they are going to do it, they need to find a way to give the other 50 per cent or so of people who haven’t got them a shot at it as well.’
Nick Hunne, of tech consultancy firm Wifore, said: ‘The issue is that only around half of households across the country have smart meters. So how can you roll out a scheme which only benefits the people who were able to get a meter first.
‘It feels like this idea has come from somebody in government who was itching to do something and rolled out a scheme without thinking about any of the consequences.’
The suggestion to use appliances overnight also caused alarm among fire safety organisations.
Households will be encouraged to sign up to a ‘demand flexibility service’ that rewards them for using off-peak electricity. They could be paid over £10 a day for taking measures such as running appliances at night (stock photo)
Martyn Allen, technical director of Electrical Safety First, said: ‘It is essential that anyone considering using appliances at night do all they can to mitigate their risk of a fire with a few simple spot checks.’
The rebate scheme will run from the start of November until March and is expected to save two gigawatts of power, enough to supply 600,000 homes.
Jake Rigg, director of corporate affairs at the National Grid’s Electricity Systems Operator, said the scheme would help homes and businesses ‘save money and back Britain’.
‘If you put your washing machine or other electrical appliances on at night instead of the peak in the early evening, you can get some money back,’ he said.
In addition to the savings offered to households, the scheme will also pay larger businesses to reduce demand by using energy outside of peak times or relying on generators and batteries during periods of high demand to ease pressure on the power grid.
Britain heavily depends on natural gas to produce electricity, with gas-fired power stations accounting for over 40 per cent of supplies.
Liz Truss was greeted by Czech counterpart Petr Fiala (right) as she arrived at the summit in Prague on Thursday
As Britain grapples with soaring gas and electricity prices and an energy supply crisis, Business Secretary Kwasi Kwarteng has been forced to say there is ‘no question of the lights going out’. But, when the country was gripped by strikes by coal workers in the 1970s, the lights really did go out. Above: A woman eats breakfast by candlelight in her basement flat in Fulham during the February 1972 miners’ strike
Prime Minister Liz Truss struck a deal on Thursday night to rejoin an EU-backed energy club in a bid to keep the lights on. She also agreed with French president Emmanuel Macron to work together on boosting energy cooperation.
Ms Truss told reporters during a visit to the Czech Republic: ‘We’re working very hard on energy security, it’s one of the reasons I am here in Prague today.
‘We have interconnectors with our European partners, we’re working on more gas supplies, we’re working on building out nuclear energy, building out wind energy, so we do have a secure supply of energy.’
Pressed to guarantee there will be no blackouts, Ms Truss replied: ‘What we’re clear about is that we do have a good supply of energy in the UK, we’re in a much better position than many other countries, but of course there’s always more we can do, and that’s why I’m here working with our partners, making sure we do have a secure energy supply into the future.’
She added: ‘We do have good energy supplies in the UK, we can get through the winter, but of course I am always looking for ways that we can improve the price for consumers.
‘That’s why we put in place the energy price guarantee as well as making sure we have as much supply as possible.’
Ms Truss has previously said she would not be telling people to ration their energy use this winter, as Russian president Vladimir Putin limits gas supplies to Europe in retaliation for sanctions linked to the Ukraine war.
During the Conservative Party leadership contest, Ms Truss also said there would be no energy rationing.
She has since offered a multibillion-pound price guarantee which will prevent average annual household bills going past £2,500.
Customers of the Masons Arms enjoy the atmosphere at the Masons Arms in Camelford, Cornwall where lights are turned off on Mondays
Pubs across the UK are turning to desperate measures, lighting candles and closing early, in the fight to keep their doors open. The Masons Arms in Camelford, Cornwall, has gone as far as to solely use candlelight on Mondays
For Labour, shadow climate secretary Ed Miliband said: ‘Today’s report from National Grid shows our vulnerability as a country as a direct consequence of a decade of failed Conservative energy policy.
‘Banning onshore wind, slashing investment in energy efficiency, stalling nuclear and closing gas storage have led to higher bills and reliance on gas imports, leaving us more exposed to the impact of Putin’s use of energy as a geopolitical weapon.
‘Yet still the Conservatives fail to learn the lessons.’
Liberal Democrat leader Sir Ed Davey called on the Government to convene the emergency Cobra committee to address the possibility of blackouts.
He said: ‘A failure to act now could see millions plunged into rolling blackouts whilst petrol and heating oil prices spiral even further out of control.’
Labour’s climate policy spokesman Ed Miliband said the UK’s energy ‘vulnerability’ was due to ‘a decade of failed Conservative energy policy’.
Conservative Party chairman Jake Berry was forced into an embarrassing apology on Thursday after suggesting those struggling to pay their bills because of the cost of living crisis should simply get a better-paid job.
Mr Berry was accused of being ‘out of touch’ when he made the suggestion on Sunday.
He told ITV’s Good Morning Britain his choice of words was ‘clumsy’ and he realised ‘how hard people work’ to make ends meet.
Speaking at a summit of European leaders in Prague, Liz Truss was pressed on whether she would stick by a guarantee that there would be no energy rationing in the wake of the National Grid’s warning
Serving tea by candlelight in a Ludgate Circus cafeteria during a power cut under the power-saving measures resulting from the miners strike in 1972
One of the regular power cuts takes out most of the lights in London’s Piccadilly Circus in 1974
The margins between peak demand and power supply are expected to be sufficient, and similar to recent years in the National Grid ESO’s base case scenario for this winter.
But in the face of the ‘challenging’ winter facing European energy supplies following Russia’s invasion of Ukraine, the grid operator is also planning for what would happen if there were no imports of electricity from Europe.
To tackle a loss of imports from France, Belgium and the Netherlands, there are two gigawatts of coal-fired power plants on standby to fire up if needed to meet demand.
National Grid Gas Transmission separately said that while gas demand will increase this winter, it expects Britain to be able to get enough gas to take it through a ‘Beast from the East’ scenario or a long, cold winter.
In addition, larger businesses will be paid for reducing demand, for example by shifting their times of energy use or switching to batteries or generators in peak times.
Without the scheme, there might be days when it was cold and still, creating high demand and low levels of wind power, when there would be a potential need to interrupt supply to some customers for limited periods, National Grid ESO’s winter outlook said.
The ESO also said that if there is not enough gas to keep the country’s power stations going in January it could force distributors to cut off electricity to households and businesses for three-hour blocks during the day.
‘In the unlikely event we were in this situation, it would mean that some customers could be without power for pre-defined periods during a day – generally this is assumed to be for three-hour blocks,’ the ESO said.
Bank of England was FORCED to step in over mini-budget amid fears £50billion fire sale could trigger financial crisis, deputy governor says
The Bank of England was forced to intervene in government bond markets last week amid fears that a £50billion fire sale could trigger a financial crisis.
In a letter to MPs defending the Bank’s actions, deputy governor Sir Jon Cunliffe said officials stepped in to prevent a ‘self-reinforcing spiral’ which could have led to a market meltdown following Kwasi Kwarteng’s mini-Budget on September 23.
This could have left millions of pension savers with losses in their retirement pots as the value of liability-driven investment (LDI) funds dwindled to zero.
Had the Bank of England not ‘worked overnight’ on September 27 on a bailout worth up to £65billion, the chaos could have resulted in ‘severe disruption of core funding markets and consequent widespread financial instability’, Sir Jon said.
The pension fund debacle has centred on LDIs, a previously little-known investment strategy thrust into the limelight by the recent market volatility.
In a letter to MPs defending the Bank’s actions, deputy governor Sir Jon Cunliffe said officials stepped in to prevent a ‘self-reinforcing spiral’ which could have led to a market meltdown following Kwasi Kwarteng’s mini-Budget on September 23
LDIs are used by final-salary pension schemes to ensure they have enough money for future payouts. They ‘hedge’ against movements in interest rates, inflation and currencies by allowing pension funds to layer up debt to buy more government bonds, known as gilts.
Gilts, where an investor lends to the government and is paid a ‘yield’ in return, are seen as reliable as they move with interest rate and inflation expectations.
But problems emerge when the value of gilts drops, as happened in recent weeks. The plunge in the gilt market was so drastic that losses ballooned beyond normal financial cushions, and pension funds were asked by the managers of their LDI pots to stump up more cash.
This meant they had to sell gilts, causing their value to plunge even further.
Many LDI funds would have failed to raise enough cash to make ends meet if the havoc had continued, Sir Jon said. ‘Pension fund investments in those pooled LDI funds would be worth zero,’ he added.
So the Bank said it would start buying gilts up to a maximum of £65billion to prop up their price. It has so far bought just £3.8billion in seven days, including £154.5million yesterday after two days when it bought nothing.
Sir Jon pinned the blame for the gilt plunge on the mini-Budget. Investors were worried about the scale of borrowing needed to fund the tax cuts and investment incentives announced, and feared a sell-off of more gilts to raise cash.
So they began to flog their existing government bonds. Painting a picture of chaos, Sir Jon described how the rise in gilt yields – which climb as their price drops – ‘was more than twice as large as the largest move since 2000’.
Had the Bank not stepped in, he said, LDI funds and other traders would have had to sell long-term gilts worth ‘at least £50billion in a short space of time’, compared to the usual £12billion a day.
Mr Kwarteng has hit back, claiming that the volatility in markets has been driven by rising US interest rates and fears over a global recession. ‘What happened in the gilt market has got nothing to do with [the mini-Budget],’ he said on LBC on Monday. ‘There was a whole range of things.’
Meanwhile, the Chancellor yesterday met mortgage lenders for crisis talks. He is being urged to consider extending the mortgage guarantee scheme which protects lenders from losses on first-time buyer clients.
It was brought in in response to the pandemic but is due to end in December. The crunch talks came as the average five-year fixed rate mortgage deal crept up to 6.02 per cent – the first time it has passed 6 per cent since February 2010.