Are you curious about what time of use energy tariffs are and how they can help you save money on your energy bills? If so, you’ve come to the right place! In this guide, we’ll be taking a deep dive into time of use energy tariffs. We’ll be discussing how they work, the advantages and disadvantages of them, and how to decide if they’re the right choice for you. So let’s get started!
What Are Time of Use Energy Tariffs?
Time of use tariffs, also known as time-of-day energy tariffs or economy 7, are a type of energy plan that charge different rates depending on when energy is consumed. This means that during peak hours, when energy use demand is high, the rate charged per unit of energy will be higher than during off-peak times, when energy demand is lower.
For example, with a time of use energy tariff, you might be charged 10 pence per kilowatt hour of electricity during the peak hours from 4 pm to 8 pm, but only 6 pence per kilowatt hour of electricity during the off-peak hours from 10 pm to 6 am.
The peak and off-peak hours vary from provider to provider, but generally, the peak hours are during the day when people are most likely to use energy, and the off-peak hours are during the night when energy demand is lower.
Advantages of Time of Use Energy Tariffs
Time-of-use energy tariffs can be a great way to save money on your energy bills, since they provide an incentive to shift your energy usage away from peak hours to off-peak hours. This can have a significant impact on your energy bills, since peak hours are often when energy is most expensive.
Time of use energy tariffs can also be beneficial if you’re able to take advantage of off-peak hours to run energy-intensive activities, such as running the washing machine, dishwasher, or tumble dryer. This can help you save even more money on your energy bills.
TOU tariffs can encourage customers to use energy during off-peak hours, when electricity is cheaper, rather than during peak demand periods when it is more expensive. This can help reduce overall energy consumption and ease strain on the grid. By shifting energy usage to off-peak hours, consumers on TOU tariffs can potentially save money on their energy bills.
TOU tariffs can help smooth out demand for electricity over the course of the day, making it easier for utilities to manage the grid and potentially reducing the need for expensive peak generation capacity.
Supporting renewable energy: TOU tariffs can encourage the use of renewable energy sources, such as solar power, which are most productive during the day when the sun is shining. This can help reduce greenhouse gas emissions and support the transition to a cleaner energy mix.
Disadvantages of Time of Use Energy Tariffs
The biggest disadvantage of time of use energy tariffs is that they can be difficult to manage, since you need to be aware of peak and off-peak hours and try to plan your energy usage accordingly. This can be particularly challenging if you have a busy lifestyle and don’t have the time to plan your gas and electricity use, and don’t want to change the way you use energy.
Another disadvantage of time of use energy tariffs is that your energy bills may still be higher than with other types of energy tariffs, since you’ll be paying more for energy consumed during peak hours than you would on other types of energy tariffs.
Complexity: TOU tariffs can be complex and may require consumers to pay close attention to their energy usage patterns and the different pricing periods. This can be especially challenging for people with busy schedules or irregular energy usage habits.
Lack of flexibility: TOU tariffs can be inflexible, as they may not allow for changes in energy usage patterns due to unforeseen circumstances, such as an unexpected heatwave or cold snap. This can make it difficult for consumers to budget for their energy costs.
Higher costs for some consumers: While TOU tariffs can be beneficial for consumers who are able to shift their energy usage to off-peak hours, they may not be as cost-effective for those who rely on electricity during peak demand periods. This can be especially true for people who need to use energy-intensive appliances, such as air conditioning units, during the hottest part of the day.
Limited availability: TOU tariffs may not be available in all areas, and even if they are, not all consumers may be eligible to participate.
Should You Choose a Time of Use Energy Tariff?
Whether or not a time of use energy tariff is the right choice for you will depend on your lifestyle and energy usage habits. If you’re able to shift your energy usage away from peak hours, then a time of use energy tariff can be a great way to save money on your energy bills. However, if you’re not able to shift your energy usage away from peak hours, then a time of use energy tariff may not be the right choice for you.
It’s also important to note that, while time of use energy tariffs can be a great way to save money on your energy bills, they’re not the only option. There are many other types of energy tariffs available, such as fixed rate tariffs, dual fuel tariffs, and green energy tariffs, so it’s important to do your research and find the right energy tariff for your needs.
We hope this guide has been helpful in giving you a better understanding of time of use energy tariffs and how they can help you save money on your energy bills. If you have any further questions, please don’t hesitate to contact us and we’ll be happy to help.
What other types of Energy Tariffs are there?
1. Fixed Rate Tariff: A fixed rate tariff is an energy tariff that offers a fixed rate for a specific period of time. This type of tariff is ideal for those who want to benefit from a set rate for the duration of their contract. The fixed rate tariff allows customers to budget for their energy costs and be protected from any price hikes during the period of the contract.
2. Variable Rate Tariffs: Variable rate tariffs offer customers the flexibility to change energy tariffs in response to changes in the energy market. These tariffs can be more cost-effective than fixed rate tariffs as they can be adjusted to suit the customer’s needs better.
3. Green Tariffs: Green tariffs are designed to support renewable energy sources. This type of tariff usually comes with additional benefits, such as discounts for customers who use more renewable energy sources.
Why do suppliers offer time-of-use tariffs?
So why do suppliers offer time-of-use tariffs?
1. To support peak demand management
Electricity suppliers are increasingly looking for ways to manage energy demand during peak hours. By offering time-of-use tariffs, the supplier can encourage customers to shift some of their energy usage away from the peak hours and reduce the strain on the electricity grid.
2. To encourage more efficient energy use
Time-of-use tariffs can also encourage consumers to use electricity and gas more efficiently. By charging different rates depending on the time of day, customers can adjust their usage to take advantage of lower rates during off-peak hours. This can help customers reduce their energy bills as well as their carbon footprint.
3. To help suppliers better manage their costs
Time-of-use tariffs can also help suppliers better manage their costs. By offering different rates depending on the time of day, suppliers can better manage their costs by charging higher rates during peak hours when demand is highest and lower prices during off-peak hours when demand is lower. This can help suppliers better manage their costs and increase their profits.