How do time-of-use tariffs affect my electricity bill?

Time-of-use (ToU) tariffs charge different rates for electricity depending on the time of day, encouraging energy use during off-peak periods to reduce grid strain and lower costs. For UK households and businesses, this means shifting high-consumption activities (e.g., EV charging, laundry) to cheaper off-peak windows can significantly cut bills, while maintaining usage during peak hours (typically 4-8pm on weekdays) increases expenses.

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Key components of time-of-use tariffs

• Peak rates: Higher prices during periods of high demand (e.g., weekday evenings).
• Off-peak rates: Cheaper electricity, often overnight (e.g., Economy 7’s 7-hour nighttime window).
• Dynamic pricing: Some tariffs adjust rates daily based on renewable energy availability or grid stress.

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How they impact your bill

• Savings potential: Using electricity at off-peak times can reduce annual bills by £100s, depending on consumption habits.
• Cost risks: Unchanged peak-hour usage may increase bills compared to fixed-rate tariffs.
• Grid benefits: Reduced peak demand helps avoid costly infrastructure upgrades, indirectly stabilising long-term prices.

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Home storage + time-of-use tariffs integration

Battery systems like those paired with solar panels allow storing off-peak electricity for use during peak hours, eliminating the need to adjust routines while maximising savings.

• Example: Charge a battery overnight at 12p/kWh, then use stored energy during peak periods at 30p/kWh.
• Key advantage: Maintain convenience while bypassing peak pricing.
• Consideration: Upfront battery costs (£4,000-£8,000) require long-term savings to justify.

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Recent UK-specific insights

• Grid strain: Peak demand reaches 61.1GW daily, concentrated in winter evenings when solar/wind generation often dips.
• Policy trends: Expanding smart meter rollout (over 34 million installed as of 2024) enables more ToU tariff uptake.
• Consumer impact: ToU tariffs collectively save UK households ~£19 million annually through load shifting.

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Practical advice for maximising savings

1. Audit usage: Identify high-consumption appliances (e.g., EVs, heating systems).
2. Automate: Use smart plugs/schedulers for dishwashers, washing machines, and EV chargers.
3. Combined systems: Pair tariffs with solar+battery setups for 24/7 low-rate energy.
4. Avoid: Unnecessary peak-hour use of kettles, ovens, or immersion heaters.

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Common mistakes

• Overlooking fixed charges: Some tariffs have higher standing charges; compare total costs, not just unit rates.
• Infrequent meter checks: Smart meter users should monitor daily usage patterns via provider apps.
• Underestimating storage: Businesses with refrigeration or HVAC systems often miss battery storage opportunities.

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Pros and cons

Pros	Cons
Lower bills through strategic usage	Requires behavioural/appliance adjustments
Supports renewable energy integration	Risk of higher costs if usage patterns stay peak-heavy
Reduces carbon footprint	Limited availability across suppliers
Future-proof against rising peak rates	Complex pricing structures may confuse users