Time of Use tariffs: unlock savings and control

Understanding how you pay for energy can feel like navigating a maze, but Time of Use tariffs offer a clear path to gaining control and potentially reducing your bills. These tariffs adjust the price of electricity based on demand and supply at different times of the day, rewarding you for shifting your energy use to off-peak periods when power is typically cheaper and greener.

What are Time of Use tariffs?

Time of Use (ToU) tariffs are a pricing structure where the cost of electricity varies depending on when you use it. Instead of a flat rate, you'll pay more during "peak" hours when demand is high and less during "off-peak" hours when demand is low. This system encourages you to use energy when it's most abundant and least expensive, which often aligns with periods of higher renewable generation.

Understanding variable pricing

The core idea behind variable pricing is simple: energy isn't always equally available or in demand. At certain times, like weekday evenings when most people are cooking and using appliances, the grid experiences high demand. To meet this, more power stations, including those running on fossil fuels, might be brought online, making electricity more expensive and often higher in carbon. Conversely, late at night or early in the morning, demand drops, and renewable sources like wind and solar can more easily meet the need, leading to lower prices.

How they differ from standard tariffs

Most UK households are on standard variable tariffs, which charge a single unit rate for electricity regardless of the time of day it's consumed. With a Time of Use tariff, your energy bill isn't just about how much electricity you use, but when you use it. This means you have the power to influence your costs by adjusting your habits, rather than being locked into a single price.

How Time of Use tariffs work

Time of Use tariffs typically divide the day into different periods, each with its own price. To make the most of these tariffs, you need to understand these periods and how your energy usage fits into them.

Peak and off-peak periods explained

Peak hours are generally when electricity demand is highest, such as mornings when people are getting ready for work and evenings when dinner is being prepared. During these times, the unit rate for electricity will be higher. Off-peak hours, conversely, are periods of lower demand, often late at night or early in the morning, when electricity is cheaper. Some tariffs might also include "shoulder" hours with intermediate pricing. The exact timings of these periods vary between suppliers, so it's crucial to know the specific schedule for your chosen tariff.

The role of smart meters in variable tariffs

While not strictly essential for all dual-rate tariffs, a smart meter is highly beneficial for most Time of Use tariffs to work effectively. Unlike older meters that only provide a single reading, smart meters can record your energy consumption in half-hourly intervals and send this data directly to your energy supplier. This accurate, near real-time data allows your supplier to bill you correctly for the different rates you pay throughout the day. Without a smart meter, applying the variable pricing structure for tariffs requiring granular data would be challenging, though some dual-rate tariffs can operate with other meter configurations if your supply has a compatible Standard Settlement Configuration (SSC).

Benefits of Time of Use tariffs

Switching to a Time of Use tariff can offer several advantages, from reducing your household expenses to contributing to a more stable and sustainable energy system.

Reducing your energy bills

The most immediate benefit is the potential to lower your electricity bills. By shifting high-energy activities to off-peak periods, you can take advantage of cheaper rates. This doesn't necessarily mean using less energy overall, but rather using it more strategically. Households that can move a significant portion of their electricity use to cheaper hours are most likely to see savings.

Gaining control over consumption

Time of Use tariffs empower you to take an active role in managing your energy. You gain transparency into how much you're spending at different times, allowing you to make informed decisions about when to run appliances or charge devices. This control transforms energy from a fixed cost into a tool for advantage, aligning with a vision of having "power to play with."

Supporting the energy grid

By using less electricity during peak times and more during off-peak, you help balance demand on the National Grid. This reduces the strain on the energy infrastructure and can decrease the reliance on less efficient, often fossil-fuel-powered, generators that are typically fired up to meet peak demand. This shift contributes to a greener, more stable energy system for everyone.

Smart meters: your gateway to Time of Use tariffs

If you're considering a Time of Use tariff, a smart meter is generally highly recommended.

Why a smart meter is important

Smart meters are crucial because they provide the detailed, half-hourly consumption data that many Time of Use tariffs depend on. Without this granular information, your energy supplier wouldn't be able to accurately apply the different peak and off-peak rates to your usage. They ensure you're billed correctly for the energy you consume at specific times, eliminating the need for estimated bills.

Getting a free smart meter upgrade

Many energy suppliers, including Fuse Energy, offer free smart meter upgrades. If you currently have a traditional meter, getting a smart meter installation is a straightforward process that unlocks access to Time of Use tariffs and their potential savings. Once your supply has switched in, you become eligible for this upgrade, making it easier to start optimising your energy usage.

Optimising your energy usage for maximum savings

To truly benefit from a Time of Use tariff, you'll need to adapt your energy habits. It's about smart timing, not sacrifice.

Shifting high-energy activities

The key to maximising savings is to move as much of your electricity consumption as possible to the cheaper off-peak windows. This includes activities like:

• Charging electric vehicles (EVs): If you own an EV, charging it overnight during off-peak hours can significantly reduce your running costs. Many EVs and chargers can be programmed to do this automatically. For more tips, see our guide on EV charging at home.
• Running appliances: Use washing machines, tumble dryers, and dishwashers with delay timers so they operate during off-peak times.
• Heating water: If you have an immersion heater or hot water cylinder, schedule it to heat water during cheaper periods.
• Storage heaters: For homes with electric storage heaters, charging them during off-peak hours can be highly cost-effective.

Smart appliances and automation

Modern technology can make shifting your energy usage much easier. Smart appliances, smart plugs, and home energy management systems can be programmed to run automatically during off-peak hours, taking the effort out of manual scheduling. This automation ensures you're consistently taking advantage of lower rates without having to constantly monitor prices or manually switch things on and off.

Monitoring your consumption with an app

Many energy suppliers provide apps that integrate with your smart meter data, offering clear visibility into your energy consumption. These apps can show you how much electricity you're using, when you're using it, and how much it's costing you. This transparency helps you identify patterns, track your progress, and further optimise your usage to maximise savings under your Time of Use tariff.

Choosing the right Time of Use tariff for your home

Selecting the best Time of Use tariff requires a bit of homework to ensure it aligns with your lifestyle and energy habits.

Assessing your household's needs

Before switching, consider your typical energy usage patterns. Can you realistically shift a significant portion of your electricity consumption to off-peak hours? Households with flexible schedules, electric vehicles, or home batteries are often well-suited to these tariffs. According to Ofgem, the average UK home uses around 2,500 kWh of electricity per year1, which can serve as a benchmark for understanding your own consumption.

Comparing tariff options

Time of Use tariffs come in various forms, including dual-rate variable tariffs. These tariffs have different unit rates for peak and off-peak periods and are typically updated quarterly in line with Ofgem's price cap announcements on 1 January, 1 April, 1 July, and 1 October. For more information on how these caps work, read our article on the energy price cap explained. When comparing, look beyond just the off-peak rate; consider the peak rates and standing charges too, as these can significantly impact your overall bill.

Switching to a Time of Use tariff

Once you've found a suitable tariff, switching is generally straightforward. Your energy supplier will guide you through the process, which will involve ensuring your meter is compatible and set up to send the necessary data. If you don't have a smart meter but need one for your chosen tariff, Fuse Energy can arrange for a free installation once your supply has switched in. After switching, actively monitor your usage and adjust your routines to make the most of the cheaper off-peak windows.

By embracing Time of Use tariffs, you're not just saving money; you're becoming a more engaged and empowered energy consumer, contributing to a more efficient and sustainable energy future.

Managing your energy bills should be clear and easy to understand. Fuse Energy focuses on straightforward pricing, so you can see exactly what you're paying without unnecessary complexity. If you have a smart meter, you can view detailed usage data through the app or website, helping you understand how you can lower your bills. If you don't have a smart meter, Fuse Energy can upgrade your non-smart meter, completely for free, once your supply has switched in. This can make it easier to track spending and make informed decisions about your energy use. Our 24/7 human support team is always on hand with fast response times whenever you need help. Click here to switch to Fuse Energy today. Find out about our mission by clicking here.