Time-of-use tariffs FAQs


What is a time-of-use tariff?

Time-of-use tariffs are designed to incentivise homeowners to use more energy at off-peak times. These tariffs having fluctuating rates throughout the day and night so people with certain lifestyles can benefit from using more cheap electricity and benefit from lower bills. This also benefits energy suppliers and the grid. By shifting some of the demand for energy from on-peak times to off-peak times, this reduces the strain on the national grid.


Is this the same as Economy 7?

Economy 7 is slightly different – Economy 7 was introduced to encourage people to charge storage heaters at night, using electricity that would otherwise be wasted. Coal and nuclear plants – which the UK has traditionally drawn most of its power from – cannot be turned off at night, and are therefore inefficient unless people use this electricity. The big difference with Economy 7 is that it only has one cheap rate which is at night. Time-of-use tariffs have several different rates, increasing the potential amount of energy and money that can be saved. Something else to take into account is that Economy 7 is not expected to be offered for much longer, as the coal plants it was designed to work alongside are being decommissioned. The only form of heating that works with Economy 7 is storage heaters (which are inefficient and difficult to use), whereas any form of heating or appliance can be run on a time-of-use tariff.


Who offers time-of-use tariffs?

At present, there are several energy suppliers which offer time-of-use tariffs. The first to offer it was Green Energy UK and they have advocated for this innovative type of tariff for a while. As the energy market is evolving, consumers are moving away from the big six and considering greener, forward-thinking suppliers. Another supplier is who’s rates change depending on your smart meter readings is Octopus Energy.


Will a homeowner need a smart meter for a time-of-use tariff?

Yes, you will need a smart meter. A smart meter gives you real-time information on how much energy you are using and sends it automatically to your energy provider. If you don’t have a smart meter, they can’t know when you are using your energy, and therefore how much to charge you for it. A national rollout is now underway, with every household that doesn’t opt out expected to have one by 2020. Energy companies are installing them free of charge.

There are other benefits of smart meters because you can track your costs as you go, meaning no nasty surprises when your bills come through at the end of the month. There are no more estimated bills, so you won’t be overcharged. You also no longer have to send readings yourself.


How do I get the most out of the cheap electricity from a time-of-use tariff?

A popular addition to solar PV is battery storage. Most models can also charge from the grid as well as your solar system. This means any remaining capacity which hasn’t been charged with free electricity, can be charged by cheap electricity from your time-of-use tariff. This helps to guarantee the use of free and cheap electricity at all times of day/night, throughout the year.

One tariff from Bulb actually paid it’s customers to use energy at 2 am one evening so you could charge your battery during this time for free, and use the free energy for your morning coffee when you wake up or if you have an EV charging overnight, you could charge your EV via the battery too.


How much could be saved with a time-of-use tariff?

If you are really clever with a time-of-use tariff the cost savings are huge. Green Energy UK’s ‘Tide’ tariff, for instance, offers electricity at 20p cheaper per unit overnight. With the average hourly electricity rate in the UK currently around 12p, the 4.99p rate offered between the hours of 11 pm and 6 am each night is going to make a huge difference. This, combined with solar PV powering your home for free in the day, is going to allow you to see a huge saving on your energy bills and if you install solar before the Feed-In Tariff scheme ends in March, you could offset the cost of installing a solar PV system as you will get paid for generating clean energy. The incentive is currently worth up to £7,000.


Will solar PV owners continue to receive payments after the Feed-In Tariff scheme ends?

Yes, as long as your system is installed and commissioned before the March 31st deadline – you will receive quarterly payments for the next 20 years, tax-free and index-linked. It’s a great benefit so many people are deciding to install solar before the deadline, but even after the incentive is removed, as energy demand increases, solar will still make sense for the majority of UK homeowners.