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What is a time-of-use tariff?

If you have a smart meter, you can choose a smart time-of-use tariff, which offers a different price of energy at different times of the day.

There are two main types of smart time-of-use tariffs: static and dynamic.

  • A static time-of-use tariff offers 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.
  • A dynamic time-of-use tariff offers a different price per unit of energy depending on the time of day. The times and rates can change from day to day. For example, price may depend on the amount of wind generation that is predicted for a particular time.

Each differs from a standard tariff, which charges a flat rate throughout the day. This is the most common tariff type in England, Scotland and Wales.

There aren't many smart time-of-use tariffs to choose from at the moment but this will change as our energy system develops a better understanding of how much energy we use at different times of day, as more of us get a smart meter.

Why are smart meters so important for Britain's energy upgrade?

How can I save money by choosing a smart time-of-use tariff?

Smart time-of-use tariffs can help you save money if you are able to use less energy during periods of high demand (known as peak periods) and more energy during periods of low demand (known as off peak periods).

This is because the cost of generating and transporting electricity varies throughout the day. Energy is cheaper when there is a lot of solar and wind power available, and more expensive when diesel-powered generators are used.

A peak period also means more people want to use energy. This means energy is more expensive because we need more diesel, wind and solar to generate electricity so that everyone can use electricity at the same time.

How can I support a cleaner, greener energy system with a time-of-use tariff?

A wind farm in the countryside, on a sunny day.

Choosing a smart time-of-use tariff will help support a cleaner, greener energy system because it encourages you to use more energy outside peak periods.

This, in turn, will help even out demand throughout the day.

This is important because, at the moment, we have to increase our use of fossil fuels during peak periods to ensure we can all use energy when we need it.

The reason we can't always use renewable energy in these circumstances is because renewable energy is not, by its nature, as reliable. The sun doesn't always shine and the wind doesn't always blow.

But if we can reduce demand in peak periods, we can use more renewable energy across the day to make our system cleaner and greener.

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