What are Smart Time of Use tariffs?
Most people in the UK are on energy tariffs that offer one price per unit of energy used, no matter the time of day. But that’s not actually how the energy industry works.
Energy is traded in half-hourly periods – meaning the price changes regularly throughout the day to reflect supply and demand. And increasingly, energy tariffs are being developed that work in a similar way.
In this article, we explain what Smart Time of Use tariffs are and how they can help you to save money and carbon.
What is a Smart Time of Use tariff?
A Smart Time of Use tariff is a multi-rate tariff that offers cheaper rates when energy demand is lower to incentivise people to shift their energy usage to these times.
There are different types of Time of Use tariffs depending on the frequency that the electricity rates change.
Static rate Time of Use tariff: A Smart tariff with two or more rates for electricity, with fixed times during the day when these charges are live. Our Electric Vehicle tariff and heat pump tariff are static rate tariffs, designed to help homes with these technologies save money and support the grid.
Dynamic rate Time of Use tariff: A Smart tariff where energy prices can change several times a day to reflect renewable electricity available on the grid, or fluctuations within the wholesale market.
What are the benefits of Smart Time of Use tariffs?
Cheaper energy bills: Time of Use tariffs are designed to lower people’s energy bills, by incentivising more cheaper off-peak electricity use and less more expensive peak electricity use. Our Smart EV tariff is designed for electric car drivers – who can charge their cars for an ultra low rate of only 8p per unit between midnight and 5am each night.
Lower carbon footprint: Time of Use tariffs can reduce how much electricity is being used at peak times, and shift some demand to lower peak times. During peak times, like 4pm – 7pm in the UK, the grid often has to rely on back-up fossil fuel generators to ensure enough electricity is available to match what is being used. Reducing how much electricity is being used at these times, and instead moving some usage into lower-peak windows, helps to make the energy grid greener.
Do you need a smart meter to be on a time of use tariff?
Yes you do need a Smart meter to get onto a Time of Use tariff.
At the end of each day, your Smart meter will send data to your energy supplier showing how your home has used electricity in every half hour period. You cannot access a Time of Use tariff without having a Smart meter, as it would be impossible to bill you correctly for the energy you’ve used.
How to make the most of a time of use tariff
Time of Use tariffs are not suitable for everyone, as people will need to make certain lifestyle changes to make the most of the cheaper electricity rates. There are things you can do to get the largest savings from a TOU tariff:
- Charge your EV during your off-peak window. Time of use tariffs are good for people who have an EV, helping them to fill up with cheaper electricity.
- Use high-energy appliances at night. Using appliances such as a washing machine or dishwasher at during your off-peak window can save money on your bills,.
- Have electric heating. Most of your energy usage will come from your heating, especially in winter. By having electric heating instead of gas, you will be able to get greater saving from a time of use tariff, especially if you time your heating to come on during the cheaper rates. Our heat pump tariff is specially designed for homes with heat pumps.
- Make use of battery storage. Battery storage is a good way to make the most of the cheaper electricity rates. By setting your battery to charge when prices are lowest, you can then use this power during peak times when prices are higher.
