Time-of-use energy tariffs

Time-of-use tariffs, also known as smart electricity tariffs, are possible once a customer has a smart energy meter that records energy consumption on a half-hourly basis. Energy companies, knowing the half-hourly energy use can offer a variety of new types of off-peak tariffs that charge different rates for electricity depending on the time of day according to the general demand at the time and the supply available.

[edit] Split tariffs

Economy 7, 9 and 10 tariffs which are the long time established older versions of time-of-use tariffs similarly charged less for electricity used at certain times or overnight (usually after midnight-7am) than for electricity used during the day. These tariffs also required special electricity meters to record night time electricity use separately from day-time use. The principle being it helps to avoid using high amounts of electricity during expensive peak times such as evenings or at peak television watching times (see TV pickup). Similarly a service trialled by the National Grid in 2022 called the Demand Flexibility Service (DFS) actively engaged with large numbers of users during what they called events, and rewarded them for not using power during certain peak winter periods, helping avoid overloads and potential blackouts and saving carbon.

[edit] Smart and complex tariffs

The options described above are in effect have similar goals in trying to balance the demands for energy that are placed on the grid and the supply of energy available from the grid, which may increasingly vary with expansion of renewables such as wind and solar. Part of this approach towards better management of grid energy towards grid optimisation has been the installation of smart meters since around 2019, and by the end of 2021 there were 26.1 million smart meters in domestic properties in Great Britain, which was about 50% of the total. In comparison a mere 3500 homes in the UK continue to rely on old economy 7 (E7) meters for their electricity supply, and a slightly higher number on the broader or complex meter systems.

[edit] Smart meter types

There are a number of different advantages of smart meters, but in particular for the supplier (and the grid) it means they have access to half hourly use data for each of the dwelling with a meter, which means they can better estimate and manage electricity supplies to match demands. The advantage to the consumer is that similar to the older variable rate charging systems they can be offered as time-of-use tariffs.

Whilst as early as 2017 there were reports of some of the earliest time-of-use tariffs, by 2020 an increasing number of households had smart meters installed, although this was hampered by the pandemic. At the end of 2021 Business, Energy and Industrial Strategy (BEIS) reported that over 50% of all meters in the Great Britain weres mart meters, however these were divided into 3 types; SMETS1 (15.3 million), SMETS2 (11.1 million) and 1.3 million with advanced meters. However whilst larger energy companies reported significant profits during the energy crisis, some 27 companies also left the market, furthermore some issue with the initial smart meters hampered early development of the programme.

• Smart Metering Equipment Technical Specification 1 (SMETS1) was the first model of smart meter to be rolled ot across the UK, however a technical issue with these meant they lost their smart functions when customers switched energy suppliers. Although the problem can be solved and smart capabilities returned if they switch providers.
• Smart Metering Equipment Technical Specification 2 (SMETS2) werre the follow-up model f smart meter installed once the initial issue was discovered.

[edit] Smart meter types

Theoretically specific rates can be charged for any number of specific use periods. or infact any number of different rates (unlike simple two rates in E7), in practice there are two types of time-of-use tariffs Static time-of-use tariffs and dynamic time-of-use tariffs.

• Static time-of-use tariff offer two or more rates for electricity at fixed times of the day. For example, a lower price during the day and overnight as compared to weekday evenings.
• Dynamic time-of-use tariff offer a different price per unit of energy depending on the time of day. The times and rates can change from day to day, depending on for example wind power predictions.

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• TV pickup