Time of use tariffs

Time of use tariffs are a new concept, designed to incentivise customers to use more energy at off-peak times, in order to balance demand. These tariffs charge cheaper rates at certain times of night or day, when demand is at its lowest, and higher rates at popular times. The benefits are two-fold: demand is managed and customers can lower their bills.

Why have time of use tariffs been introduced?

In terms of energy generation, the UK’s future is uncertain. Closing coal power plants to help meet the country’s carbon reduction targets has had a big impact on the amounts of energy the UK is able to generate. With very little investment in other forms of energy, such as renewable sources, experts are predicting energy shortages in the years to come. Time of use tariffs could have a big role to play in reducing demand, and therefore lessening the pressure on UK energy infrastructure.

How are time of use tariffs different from Economy 7?

Some people might wonder how this is different to Economy 7. 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, 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.

Do I need a smart meter for a time of use tariff?

Yes! 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 install them free of charge and

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 many time of use tariffs are available?

At the moment, there is only one – Green Energy UK’s ‘Tide’ tariff. Green Energy UK is somewhat of a pioneer these days, with 100% of their energy generated from renewable sources, and their tariff leading the way in terms of encouraging demand balancing.

Once smart meters have been installed in the majority of homes, most energy companies are expected to start offering the new tariffs.

How much money could I save on a time of use tariff?

Quite a lot, if you use it cleverly. Let us explain – 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 11pm and 6am each night is pretty tempting! You may wonder what the point is in offering electricity while everyone’s in bed. Well, it’s up to people to change their habits! Clearly, people are always going to need to use the washing machine during the day at certain times, but you could start trying to do the bulk of your washing at night. The same goes with running dishwashers, bread machines etc.. You get the picture!

Time of use tariffs – the future

All in all, time of use tariffs are a pretty big development – they mean lower bills for customers and less pressure on UK infrastructure. People running their most power-hungry appliances at night could really lessen strain on the National Grid. Reducing power surges will avoid blackouts and hopefully ensure a constant supply of energy, at a point where the future of energy supply in the UK is looking a bit shaky.

Something that could greatly affect the way people use time of use tariffs is the ongoing development of battery storage technology. Home battery storage systems help manage demand by making people less reliant on national energy supplies. Until recently, these systems have been the preserve of people with home renewables, wanting to store the energy they generated to use at a later time. The introduction of time of use tariffs mean these systems could now be worthwhile for anyone. Those on these tariffs can maximise savings by charging batteries with electricity at the cheap times of day, and then use it later on, whenever they need it. This could potentially save people hundreds of pounds per year.


  • Potentially cheaper bills for customers
  • The resulting demand-balancing reduces strain on the UK’s energy supplies


  • Currently, only one energy supplier offers this kind of tariff.
  • Requires small behavioural changes from the consumer in order to save money.