Consumers will be offered incentives to run their dishwashers in the middle of the night, under a government-backed proposal that could reduce Britain’s power use by the equivalent of two power stations.

New “smart” electricity meters allowing consumers and power companies to monitor exactly how much electricity is being used at any given time could be installed in every home across Britain within seven years, under an accelerated industry plan that has won the backing of John Hutton, the Business, Enterprise and Regulatory Reform Secretary.

As well as helping consumers to identify ways to cut their bills by turning off electrical equipment and using more energy-efficient devices, the meters will also enable power companies to offer off-peak deals, similar to those that are offered by telephone operators.

People who are happy to use their appliances at periods of low demand – such as 1am to 5am – would be rewarded with lower bills, according to Ian Peters, chief operating officer of British Gas, which is backing the idea.

Mr Peters argues that the new meters will help power companies to smoothe out demand for electricity across any 24-hour period, so reducing the total generating capacity required at peak times, such as early morning and evening.

According to research by Frontier Economics, on behalf of British Gas’s owner Centrica, the new scheme would cut total UK power demand by about 1,000 megawatts (1GW), or nearly 2 per cent of the 70,000 mega-watt (70 GW) total. The figure represents up to £1.5 billion in excess power demand – or the electricity produced by two mid-sized power stations.

Frontier estimates that 20 per cent of British consumers would switch to the new off-peak tariffs.

Mr Hutton said that he was convinced by the industry’s argument that the high-tech instruments should be brought in under an accelerated programme, rather than under the programme of ten years or more that is on the table at present.

“Ten years is just too long,” Mr Hutton said. “The energy-efficiency benefit that meters will bring is really necessary if we are to meet our climate change targets.

“I’m very supportive of the industry’s argument, but they will have to make a business case for it and it could require legislation.”

Mr Peters estimates that putting smart meters in every UK home will cost £6.1 billion, but he argues that it will quickly create signicant savings.

Mr Hutton’s backing puts him and Britain’s energy suppliers at loggerheads with National Grid and Ofgem, the regulator, which prefer an existing proposal that ministers have already backed to rush through more limited electricity-display devices next May. The energy industry says this would be a waste of money and would hinder introduction of high-tech devices that would save far more cash and carbon.

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