Net Zero Transition: Consumer-led Flexibility

Claire Young Excerpts

Tuesday 9th December 2025 Westminster Hall

[Claire Young (Thornbury and Yate) (LD)]

I beg to move,

That this House has considered consumer-led flexibility for a just transition.

It is a pleasure to serve under your chairship, Mr Vickers. We have a problem in this country—one that is hitting all our constituents in the pocket, while wasting electricity and pushing up carbon emissions. At the root of the problem is a mismatch between supply and demand. The places where it is cheapest to generate clean electricity are not the areas that consume the most, and our current grid does not have the capacity to move the electricity from one place to the other when demand is high. It was built to transmit power being produced by a limited number of large power stations, not the dispersed renewable energy that provides so much of our electricity today.

As we make ever greater demands on the grid, as we electrify transport and move away from gas for heating, the problem grows, and those demands are not felt evenly throughout the day. In particular, there is a big peak in the evening as people return home from work and school, cook their evening meal, plug in their cars and turn on the heating. Those peak demand periods do not necessarily match the peak supply periods of intermittent weather-dependent forms of generation.

Something has to be done to balance the grid, so how do we deal with the problem currently? We have the farcical situation whereby we all pay producers to turn off wind turbines in Scotland and pay others to turn on gas-powered fire stations in south-east England. Those constraint payments have already cost us nearly £1.3 billion this year, and it is predicted that that could rise to a massive £8 billion by 2030. All of us are paying those costs through our electricity bills. Paying producers to turn off clean power while paying others to burn fossil fuels sounds like madness, but it is the reality.

What can we do to solve the problem? We could fix it by upgrading the grid infrastructure, which needs to happen, but that takes time, and time is not on our side. We could fix it by building new power generation capacity in the areas that need it most, but that cannot be done quickly either, and do we really want to locate renewable energy capacity in suboptimal locations simply to meet local demand?

Fortunately there is an alternative: consumer-led flexibility—a way for households and businesses to flatten the demand, help to stabilise the grid, increase our nation’s energy security and cut everyone’s bills. Unlocking just 10 GW of consumer-led flexibility by 2030 would be the equivalent of a third of the UK’s entire gas power station capacity. It is more sophisticated than the old Economy 7 time-based approach. Smart technology can respond to signals from the grid and to users’ needs.

Imagine someone arriving home from work in their electric car—they do not need to use it again until the next morning, but it is easiest to plug it in when they get home so they do not forget to charge it. Unfortunately, it is the peak period, so they are adding to the peak demand, but with electricity costing the home consumer the same throughout the day, where is the incentive to do otherwise?

With a smart charger and tariff, and a car that can do vehicle to grid—giving power back to the grid from its battery—things could be different. Importantly, from the consumer’s point of view, little changes—they plug in when they get home as usual, and next morning, their car is charged and ready to go. But instead of charging straight away, a smart charger recognises that the car could give back some power now. That helps to boost supply at the time of peak demand, and that supply is being provided right where it is needed, not hundreds of miles away at the other end of an inadequate grid. Then the car is recharged later, when demand is lower.

There are many other, similar scenarios involving battery storage, smart appliances, heat pumps and thermal storage in homes and workplaces, which are all ways to intelligently shift energy use to times when it is cheap, clean and abundant. The upsides are huge, not least because, by cutting constraint payments and reducing the investment needed in new and upgraded energy infrastructure, the potential is there to cut bills for everyone, not just those who can participate.

The MCS Foundation estimates that consumer-led flexibility could cut £375 from the average household electricity bill by 2040. It can be deployed more quickly than building new infrastructure. It can reduce carbon emissions by reducing the need for gas. It can increase grid resilience, enhancing our energy security, and it can create jobs and growth, with UK companies exporting their know-how abroad.

[James Naish (Rushcliffe) (Lab)]

I declare an interest: I worked on RIIO-ED2 for the Northern Powergrid and on its business plan for the current price period. The hon. Lady mentioned the pace and speed of flexibility, and the whole concept behind that plan was flexibility-first. Flexibility has been talked about for a long time in the industry. Does she agree that what we need now is real urgency to make it happen?

[Claire Young]

I absolutely agree, and I am coming to those points.

The Government have set out a clean flexibility road map, and E.ON has found that 84% of people want more control over energy, so what is the catch? It might be said that this is all well and good for affluent consumers, who can afford the smart technology—the electric cars, battery storage and heat pumps, and the washing machines and dishwashers with timers so that they do not have to get up in the middle of the night to switch them on. It is all right for those who are digitally literate and for those who have heard of smart tariffs—let alone got their head around how they work. What about those who do not fit into those privileged categories? How does consumer-led flexibility fit with a just transition?

A report by the MCS Foundation in August found that 78% of people are unaware of schemes that reward households for reducing energy use at certain times and 41% are unlikely to switch to tariffs offering cheaper electricity outside peak times. If only a privileged few can access flexibility, will it deliver the potential benefits or simply place more of a burden on those already struggling to pay? It has the potential to lower all bills—as previously mentioned—by driving costs out of the system. That benefits even those who cannot participate. But we need to do more. To achieve the scale of change necessary, we need more action from the Government.

About three in 10 homes still do not even have smart meters, and the Government concede that, in those that do, one in 10 is faulty, while others put the figure even higher. That does not bode well for the roll-out of more advanced smart technology. What about the digitally excluded? The Government should oblige energy suppliers to engage with digitally excluded groups and those on low incomes on the benefits of flexibility. Does it not make comparing tariffs more complicated? Potentially it does, so why not support a “try it and see” approach by requiring energy suppliers to offer risk-free trial periods for time-of-use tariffs?

We have all seen, in other periods of rapid technological change, that some projects fail, so Ofgem needs to strengthen consumer protection, with clear redress powers if that happens. The Government’s own clean power action plan says that to reach clean power 2030, we need 12 GW of consumer-led flexibility—more than nuclear, hydrogen and carbon capture combined. But flexibility gets none of the coverage that those technologies do. It is all very well having a road map. What are Ministers actually doing to change the fact that nearly four in five people do not even know that they can be rewarded for changing when they use electricity?

The markets have been designed for the traditional fossil fuel generators, not for individuals and businesses that generate their own power or can offer storage. We need a presumption of openness in energy market design and rules to support them. If a rule from a market maker prevents a family with a battery, or a business with thermal storage, from participating in the market, it should be forced to justify why. The way that the network costs and final consumption levies work means that consumers cannot currently be paid to use excess renewable power when electricity prices go negative. That needs urgent reform. Imagine how much easier it would be to make the case for the clean energy transition if people could be paid for using clean, free power.

If flexibility is to be delivered, there needs to be clear accountability, without room for buck passing between the Department for Energy Security and Net Zero, Ofgem and the National Energy System Operator. The new flexibility commissioner needs to be given teeth, the ability to demand transparency and accountability from everybody involved, and the authority to call out failure. Have Ministers looked closely at the industry progress board that has been set up, and can the commissioner work with it?

It is time to give people the chance to take control and be active participants in our energy system, rather than being at its mercy. The road map, the commissioner and the technology are all in place, and we know that the public want more control over their energy and their bills. Will the Government take the extra steps needed to make this happen, or will they allow the dinosaurs of the old system to stand in the way? Let us move beyond the map to make this a reality and slash bills for everyone.

[Martin Vickers (in the Chair)]

I remind Members that they should bob if they wish to be called during the debate.

--- Later in debate ---

[Claire Young]

I will not test everyone’s patience either. I thank everyone for their contributions. Between us, we have highlighted not just the potential for lowering bills but, as the hon. Member for Washington and Gateshead South (Mrs Hodgson) explained, the benefits for local economies through the generation of good, clean energy jobs. The hon. Member for Strangford (Jim Shannon) highlighted the benefits for those in rural, off-gas areas, which many of my constituents will appreciate, and the importance of making the technology affordable.

I hope the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith), does not really want our constituents to continue paying for excessive fossil fuel generation when there is an alternative. It is important that consumer-led flexibility is about empowering our constituents, not forcing them to do things. It is also important that we support everyone who wants to participate, not just those for whom it is easiest. I thank the Minister for his response, which gives me some hope, but I will be keeping a close eye on this transition as it progresses.

Question put and agreed to.

Resolved,

That this House has considered consumer-led flexibility for a just transition.