What's a time-of-use tariff, and how's it different from a standard one?

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What's a time-of-use tariff, and how's it different from a standard one?

What is a time-of-use tariff, and how does it differ from a standard tariff?

A time-of-use tariff (ToU) charges different prices for electricity based on the time of day. Peak hours (typically 4–8pm on weekdays) cost more, while off-peak hours (e.g., overnight or windy/sunny periods) are cheaper. A standard tariff charges a flat rate regardless of usage time.

How time-of-use tariffs work in the UK

Peak vs. off-peak pricing: Electricity is most expensive during high-demand periods (e.g., evenings) and cheapest when demand drops (e.g., midnight–6am).
Dynamic pricing: Some tariffs change prices daily based on weather forecasts or grid renewable generation (e.g., lower rates during windy periods).
Smart meter requirement: ToU tariffs require a smart meter to track hourly usage.

Key differences from standard tariffs

Feature	Time-of-Use Tariff	Standard Tariff
Price structure	Variable rates (peak/off-peak)	Flat rate
Best for	EV owners, solar/storage systems, flexible users	Low-engagement households
Savings potential	High (with usage shifts)	Predictable but limited

Home storage + time-of-use integration

How it works:

Charge batteries overnight at off-peak rates (as low as 7–10p/kWh).
Use stored energy during peak hours (avoiding 25–30p/kWh rates).
Combine with solar: Store excess solar power instead of exporting it to the grid at low rates (typically 1–4p/kWh).

Real-world example: A UK household with a 5kWh battery could save £200–£400/year by avoiding peak pricing.

Practical advice for UK users

✅ Do:

Run dishwashers/washing machines overnight
Pre-heat homes before 4pm in winter
Pair ToU tariffs with EV charging schedules
❌ Don’t:
Use high-wattage appliances (ovens, dryers) during peak hours
Sign up without a smart meter
Assume savings without actual usage shifts

Pros and cons

👍 Benefits:

Lower bills: Shifting 30–40% usage to off-peak can save 15–25% annually.
Grid support: Reduces reliance on fossil-fuel power plants.
Future-proof: Suits increased EV adoption and heat pump usage.

👎 Drawbacks:

Habit changes required: Peak hours coincide with typical family routines.
Risk of higher costs: Poor planning could increase expenses.
Limited providers: Fewer suppliers offer truly dynamic ToU tariffs.

Common mistakes

Underestimating peak usage: Evening TV/lighting adds up fast.
Ignoring weather impacts: Dynamic tariffs may offer very low rates during storms (high wind generation).
Failing to automate: Smart plugs/appliances are essential for consistent savings.

Recent UK developments (2023–2024)

EV tariff growth: Octopus Energy’s "Intelligent Go" offers 7p/kWh overnight charging.
Grid flexibility incentives: National Grid’s Demand Flexibility Service now includes ToU users.
Solar-storage bundling: Installers increasingly package batteries with ToU-ready tariffs.