Energy Act 2023: What landlords need to know about energy smart appliances

From licensing ‘load controllers’ to dealing with hacking attempts, policy and practice officer Matthew Scott outlines how the Energy Act will affect the way landlords and their tenants think about and use energy smart appliances.

On 26 October 2023, the Energy Bill became law. The act is the largest piece of primary legislation on energy in several years and aims to transform the UK’s energy system “by strengthening energy security, supporting the delivery of net zero and ensuring household bills are affordable in the long-term".

Despite its focus on energy – a central part of home life for everyone – there is little in the act of concern to housing professionals and organisations. However, littered between treatises on nuclear power and core fuel resilience are a few morsels of importance. 

One of the least noted but potentially most consequential parts of the act is on ‘energy smart appliances’ (ESAs).

Energy smart appliances 

The act defines an ESA as: 

“An appliance which is capable of adjusting the immediate or future flow of electricity into or out of itself or another appliance in response to a load control signal; and includes any software or other systems which enable or facilitate the adjustment to be made in response to the signal.” 

Roughly translated, an ESA is any appliance that can be told to switch on and off remotely via a signal. To a degree, these technologies are already well established in the market. With the right app, we can turn our heating on when we are on the train home so it’s warm when we get back, or we can tell an electric vehicle to start drawing electricity from a home charger before we go to bed, ready for use in the morning. 

The reason that ESAs are important is because of the likely role they will play in our future electricity system. You may have noticed the occasional scare story of ‘rolling blackouts’ in the media over the last couple of years, which proclaim that the electricity network might have to shut off the power to entire cities or regions to stop itself from overloading. 

Usually, these stories are without merit. But they are a genuine worst-case scenario that stems from the fact that we are ever-more reliant on electricity for heating, cooking, and home life in general. Typically, electricity use is crowded into certain periods called ‘peaks’, the classic being the 4pm-7pm evening peak, caused by people returning home from work or school and firing up their kettles, ovens, washing machines, and heating systems. 

This puts pressure on the electricity grid, which must supply electricity on demand to everyone wanting a cup of coffee and some fishfingers at 5pm. As we increasingly install heat pumps, electric vehicle chargers, and other smart gadgets in our homes, this demand will increase. 

There are two options, both of which the electricity system will need to survive. We must continue to improve the resilience of the electricity grid, but we also need to incentivise people to shift their electricity consumption to non-peak times. 

This is where ESAs come in. 

Imagine at 4.56pm on Thursday, August 30, 2029, the electricity grid is becoming a bit overwhelmed with everyone cooking fishfingers. With your permission, the grid could send a signal to your washing machine to turn off if you happened to have switched it on, and then send a signal for it to resume its cycle when demand on the grid has lessened. The grid is happy, you’re not (that) inconvenienced, and you probably receive a small discount on your energy bill. 

This is the role that ESAs will play in a smart, flexible electricity system of the future, one that is essential for meeting our statutory climate targets. 

What the act introduces 

However, there have been two main concerns raised with ESAs in recent years. 

The first has been in relation to cybersecurity and the potential that ESAs could be hacked for malicious purposes. In 2021, Which reported that a home it had filled with smart devices was subject to 12,000 scanning or hacking attempts in just one week. Conceivably, savvy burglars could hack ESAs that are linked to smart doors, enabling access to a home without raising any alarms. 

The second concern has been in relation to remote control by someone other than the household or occupant. Here, with the explicit permission of the household, an outside entity (such as a social housing provider) can send signals to appliances inside someone’s home when it wants to turn them on or off. 

'Which' reported that a home it had filled with smart devices was subject to 12,000 scanning or hacking attempts in just one week

For example, housing provider Sero Homes is taking part in a trial in which it is (with permission, and with financial incentives) turning down people’s heat pumps at peak times to see if it affects their thermal comfort. While this kind of innovation is welcome, there is currently no regulation of ‘load controllers’, the fancy name for an organisation like Sero that can remotely control appliances inside people’s homes. 

The act therefore takes steps to introduce provisions on both points. Part 9, Chapter 2 of the act gives the government the power to set regulations for ESAs, so that devices meet minimum technical requirements for cybersecurity, interoperability, data privacy, and grid stability. 

Part 9, Chapter 3 gives government powers to license load controllers, with the aim of ensuring they operate in a way that is beneficial for people and the electricity grid and meet minimum requirements on consumer protection and cybersecurity. 

Despite this, some challenges remain that housing professionals should be aware of. ESAs are increasingly enabled by smart electricity tariffs, which incentivise people to use (or not use) their appliances at certain times of day.

The best known is Octopus Energy’s ‘Agile’ tariff, a variable tariff that offers different prices at different times of day. It is not unusual for the Agile tariff to go into negative pricing overnight, meaning you are paid to use electricity rather than paying for it. If you are on that tariff, this is a perfect reason to defer some electricity intensive activities until, say, 2am, especially given the enduring high price of electricity since the beginning of the energy crisis. 

But there are consequences here that have yet to be fully explored. Firstly, there are clear implications for fire safety. Unless you are prepared to sit and wait for it to finish, most people would likely go to bed and leave the washing machine and dishwasher to it overnight. This is against the advice of most Fire and Rescue Services. 

There are also potential noise consequences. In a block of flats, running a dishwasher and washing machine overnight might cause noise issues for your neighbours and could reasonably be considered a nuisance. 

What’s next? 

The act gives the government the ability to set regulations on these issues, but we don’t yet know what these regulations will look like. A government consultation on cybersecurity was concluded in March 2023 and should form the basis for forthcoming regulations. 

At the same time, the government also published a detailed report on the safety of smart domestic appliances. However, there doesn’t seem to have been much consideration given to the noise implications of electrical appliances running overnight. 

When the regulations are brought forward, as a sector, we will need to understand the potential implications for our residents and our organisations.

• Read our ‘WYNTK’ guide on the new Energy Act 

Image: Said FX/Shutterstock