Sara Bell, CEO of Tempus Energy, and her colleague George at the Tempus Energy trading desk.

Electricity demand varies in the UK distributing energy during peak periods is more expensive, increasing carbon emissions. There are also periods where surplus renewable energy is wasted. Consumers mainly pay the same rate through the day giving no incentive to reduce use during peak periods and increase when renewable energy is plentiful.

Tempus’ electricity supply tariff identifies flexible equipment which allows peaks and so CO2 emissions to be reduced and customers to save money. It has lowered by 20% customers’ maximum energy prices.

Tempus is using demand flexibility to capture value at every level in the electricity supply system. It has the potential to disrupt the market and create real change in a slow-moving and highly regulated industry.

Ashden judging panel

Tempus was originally awarded for their innovative work as both a technology developer and energy supplier, aiming to change the way the world buys and uses electricity. Using advanced technology to connect customers with the cheapest available energy prices, it used smart equipment to automatically shift non-time critical electricity consumption out of expensive peak periods and into off-peak periods when prices are lower, often when renewable generation is plentiful.

In October it closed its UK electricity supply business as the combination of market interest in its technology and cost reduction in battery storage meant the high cost of running a supply company was no longer the best business approach. Markets with fewer fossil fuel subsidies create a more accurate price for wholesale electricity meaning the difference between low demand and high demand pricing is steeper, increasing the reward for flexibility. The Australian market is one such market and is proving very exciting for Tempus. The company is in the process of establishing a subsidiary in South Australia to manage large customers’ flexible load and will be installing battery storage without the need for the investment required to be an electricity supplier.

Sunshine Tariff launch.

While Tempus is still working in the UK and will be managing the charge/discharge cycling for battery storage for a solar developer commencing in 2017, the company has been disappointed by the continued willingness of the government to allow out-of-market subsidies for fossil fuel that take away value for innovation. Tempus hopes that rapid success in Australia and later the US will encourage the UK government to place greater faith in the power of markets to create the necessary investment case for flexibility.

Context

This innovative energy supplier aims to change the way the world buys and uses electricity, using advanced technology to connect customers with the cheapest available energy prices. Tempus Energy uses smart equipment to automatically shift its customers' non-time critical electricity consumption out of expensive peak periods and into off-peak periods when prices are lower, often when renewable generation is plentiful.

This market-based business model helps integrate cheap but variable renewable electricity supply into the grid by better matching it with flexible demand. By helping customers reduce electricity use during peak periods, Tempus can cut their tariff by up to 20%, and reduce the need for carbon-intensive generators as well as the strain on electricity networks.

Impact

Tempus has been using its technology to reduce customers’ energy bills in the UK for over a year now, and its supply business has been growing rapidly. As a result, international interest in the technology and approach is growing. The supply business now has:

  • 20 commercial customers, comprising almost 200 sites, including the EAT chain of food stores and Hertz car rentals.
  • 750 kW flexible demand to trade on a daily basis.
  • 30 GWh annual supply of electricity – shifting a typical 20% of this away from peak demand periods results in a CO2 saving of over 500 tonnes/year.

Future plans

Tempus Energy plans to start helping other suppliers and new market entrants to use its technology and approach both in the UK and internationally. It is also working on increasing the use of renewable energy, by boosting the use of electricity when renewable generation is high, so that demand can be reduced later when generation has dropped. The latest example is a community energy project in Scotland where Tempus has been appointed as the energy supplier; excess wind generation at night will be used to run electric storage heaters in blocks of flats in Edinburgh, benefitting those who most need affordable energy.

The energy market live feed supplied by Reuters at the Tempus Energy head office in Central London. © Andrew Aitchison / Ashden

Detail

Flexible demand – a new alternative Tempus Energy was founded in 2012, and in early 2015 brought a radical new electricity supply tariff to the market. It identifies customer equipment that is flexible, such as air conditioning, refrigeration, storage heaters, heat pumps or electric vehicle charging. Equipment like this does not run continuously, and the exact time when it does run is not critical, allowing it to be flexible. This is an alternative approach to balancing electricity supply and demand; the traditional model treated demand as largely inflexible, and required supply to be varied, but now demand can be flexible too. This allows peaks in electricity demand to be reduced, reducing CO2 emissions and saving money. 

Tempus is adapting to a changing energy environment, helping customers to manage their energy costs. To grow the potential of renewables in the UK energy mix, we need to manage demand, not generation.

Sara Bell, CEO, Tempus Energy

Rather than selling its customers’ flexible demand capacity directly to National Grid, Tempus has taken the radical approach of using it to enable it to proactively trade in the wholesale electricity markets and reduce network costs. By helping its customers reduce electricity use during peak periods, Tempus can cut their tariff by up to 20%, reduce the need for carbon-intensive generators that are only used in peak periods, and reduce the strain on electricity networks. Tempus is also starting projects to use demand flexibility to make better use of local renewable energy sources, by increasing demand when renewable generation is high, and reducing it when it is low. 

Smart meters at a domestic customer.

Tempus has the potential to redefine the energy market, forcing competitors to increase their pace of innovation, cut CO2 emissions and cut costs.

Tempus Energy business model

Because Tempus can control its customers’ flexible demand, it is able to use a different trading strategy to other players in the wholesale electricity markets (see sidebar), creating opportunities for it to capture value for its customers:

  • Tempus schedules customer equipment to turn down during peak demand periods, turning it up beforehand and afterwards to compensate, thus reducing the quantity of electricity purchased during expensive periods.
  • When the spot market price rises unexpectedly, Tempus turns down customer demand, allowing it to resell electricity it had purchased in advance, making a profit and reducing the need for carbon-intensive peaking generators to start up.
  • By reducing electricity consumption during peak periods, it reduces fees paid to the distribution network operators (DNOs) – these can be as high as 33 p/kWh at peak time in some regions, compared to less than 1 p/kWh at night. This helps the DNOs, by reducing the strain on their infrastructure. 

Tempus passes on a share of these financial benefits to its customers in the form of a reduction of up to 20% compared to tariffs from other suppliers.

Tempus Energy customers

To make use of flexible demand, Tempus installs small electronic devices in its customers’ premises to turn equipment up and down, and monitor it to ensure that it is operating within limits that are acceptable to the customer. The customer does not pay for installation; Tempus covers the capital cost, which it recovers through the profits made supplying electricity. 

Commercial customers usually have the most to gain by buying their electricity from Tempus, due to the prevalence of refrigeration, air conditioning and other flexible high-demand processes. Domestic customers can benefit too though, for example where it is possible to manage whole blocks of flats using electric storage heaters. In all cases the customer does not need to do anything – the system works automatically and responds to commands from Tempus sent securely via the internet. Customers can however temporarily override the Tempus controls if they want to, but in practice this rarely happens.