- New standards for smart appliances to save consumers money on their bills as part of the Plan for Change
- rules will mean new heat pumps and certain other electric heating appliances must be sold with smart functionality, which customers can choose to activate to access cheaper deals
- customers able to shop around for best deals as smart appliances like electric vehicle charge points and heat pumps must operate across different suppliers
Consumers will benefit from a wider range of cheaper energy deals thanks to new requirements for smart appliances like heat pumps and electric vehicle chargers.
This will enable more households to access cheaper tariffs to cut their energy bills, to deliver on the government’s Plan for Change to put more money in people’s pockets.
Energy Smart Appliances allow consumers to shift their electricity usage to times when it is less costly for the energy system. When an appliance’s smart function is activated, it will respond to price signals and can then use energy when it is cheapest, such as overnight.
Many are already cutting their bills by taking advantage of off-peak deals. For example, electric vehicle owners with a typical annual mileage can save £332 a year by charging their cars overnight using a time-of-use tariff.
A new framework will introduce requirements for heat pumps to be sold smart-ready, in line with regulations that already apply to electric vehicle chargers. This will give heat pump owners the choice to activate smart functionality and make savings by heating their homes when energy is cheaper. This can save around £100 per year compared to the costs of a gas boiler.
The government will also ensure that a range of appliances including electric vehicle smart charge points, heat pumps, and battery energy storage systems must be able to operate across different tariffs. This will mean that devices are not tied to one energy supplier, and so consumers will not be locked into one plan. This will deliver savings by encouraging competition and allowing customers to shop around for the best deals regardless of what device they have.
The measures form part of the government’s Clean Power Action Plan, which sets out pro-consumer reforms to help households benefit from lower energy bills.
Energy Minister Michael Shanks said
From EV chargers to heat pumps, smart appliances can do the hard work for consumers by automatically using energy when the price is low. We want to put more money in people’s pockets as part of Our Plan for Change by making it easier for people to benefit from cheaper off-peak tariffs in their home.
These new standards will also bring a common-sense approach to smart appliances by ensuring different brands and models can operate across different energy suppliers, allowing consumers to shop around for the best deals.
Tough new cyber security standards will be introduced for smart appliances, to protect customers and their data from cyberattacks.
Not only will these measures help smart energy consumers to cut their bills, but lowering peak electricity demand would minimise the electricity infrastructure that needs to be built. This could contribute to saving £40 to £50 billion between now and 2050, leading to further savings for all billpayers.
Increased consumer-led flexibility will help to deliver the Clean Energy Mission, by enabling Britain to make the most of its renewable electricity at times of high generation or low demand, which will reduce the need for expensive fossil fuelled power.
The introduction of the Market-wide Half Hourly Settlement in 2027 will require energy suppliers to use the most accurate data, so they can offer more smart tariffs that allow customers to choose when to use energy and benefit from savings. Earlier this month, the Energy Secretary Ed Miliband and Ofgem CEO Jonathan Brearley wrote to energy companies warning that no further delay will be tolerated to the roll out of this new system, to ensure consumers can benefit as quickly as possible.
Notes to editors
The new regulations for heat devices will apply to hydronic heat pumps, storage heaters, heat batteries, standalone direct electric hot water cylinders, hot water heat pumps, and hybrid heat pumps, all up to a thermal capacity of 45 kW.
The savings for switching from a gas boiler to a heat pump on a time-of-use tariff are based on internal DESNZ analysis. In this scenario, switching from a gas boiler on a fixed price tariff to an air source heat pump on Octopus’ Cosy tariff have been modelled.
DESNZ published the potential savings from overnight EV charging in the Future default tariffs call for evidence (p10).
The electricity infrastructure savings from CLF have been estimated by the Electricity Networks Strategic Framework analysis (ENSF) to be £40 to £50 billion (cumulative, 2021-2050, 2020 prices).
See more information on the letter from the Energy Secretary and Ofgem CEO.
The government will, subject to Parliamentary approval, put forward secondary legislation on energy smart appliances within the next year. There will then be a 20-month period to allow manufacturers to update production, before the regulations will be enforced.
The measures follow a consultation on Smart Secure Energy System proposals between April 2024 and June 2024.
