SMART METERS ARE ENABLING NEW TARIFFS WHICH COULD HELP YOU SAVE
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Smart meters are helping energy suppliers offer new tariffs which could work better for you, including time-of-use tariffs. These tariffs could help you change the way you use energy in your home, so you can save money on your bills. Sounds good, doesn’t it?
What is a time-of-use tariff?
If you have a smart meter, you can ask your energy supplier if they offer a smart time-of-use tariff. Time-of-use tariffs offer different prices for energy at different times of the day. With these tariffs, energy is cheaper when less people are using energy, or when there is more renewable energy being generated.
For example, if you use your washing machine when there is a lot of renewable energy being produced (on windy or sunny days), your energy could be cheaper. Or if you’re awake at night and use your TV, you could pay less for that energy.
These tariffs are completely optional, and have been designed to help you save money on your bills. So, you can feel more in control of the energy you’re using and your energy bills.
How are smart meters helping energy suppliers provide more tariffs?
Time-of-use tariffs like Economy 7 have been around for a while, but there aren't many to choose from at the moment. But this will change and they’ll be more accessible as more of us get a smart meter, thanks to the half-hourly readings they provide:
Half hourly meter readings mean that your smart meter will send a meter reading to your supplier every 30 minutes. This data will help energy suppliers understand how much energy is being used around the country, and when. With this information, energy suppliers will be able to offer more tariffs to suit our different lives.
What types of time-of-use tariffs are there?
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, the price may depend on the amount of wind power that is predicted for a particular time.
These are both different to a standard tariff, which charges a flat rate throughout the day. This is the most common tariff type in England, Scotland and Wales.
How can you 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 when demand for energy is high. When demand for energy is high, more people want to use energy. This means energy is more expensive because we need to rely on fossil fuels to ensure everyone can use electricity at the same time.
You could also save money if you use energy when there is more renewable energy being generated. For example, if there is a strong wind across the country. Energy is cheaper when there is a lot of solar and wind power available, and more expensive when diesel-powered generators (which burn fossil fuels) are used.
With a time-of-use tariff, if you can be flexible with how and when you use energy, you could save money on your bills.
How are time-of-use tariffs making our energy system greener?
Choosing a smart time-of-use tariff will help our energy system become greener because it encourages you to use energy when there is less demand. For example, in the middle of the night when the majority of us are asleep.
This is important because, at the moment, we have to increase our use of fossil fuels when there is more demand for energy, to ensure we can all use energy when we need it.
The reason why we can't always use renewable energy during peak periods is that renewable energy is not as reliable. The sun doesn't always shine and the wind doesn't always blow.
But if we can reduce demand during busier periods, we can use more renewable energy across the day to make our system cleaner and greener.
How have time-of-use tariffs helped Grahame? A case study
Grahame lives in a four-bedroom detached house in West Lothian with his wife and two children. He had his smart meter installed in February 2019. He is passionate about helping Great Britain to use energy more efficiently, and sees time-of-use tariffs and smart meters as key to both these things.
Hi, my names Grahame and I live in Broxburn, West Lothian. I wanted to get a smart meter fitted in 2019 to save me money and keep an eye on my energy use.
I was really keen to decarbonise my lifestyle and I’ve taken steps since getting a smart meter to do that. I’ve bought an electric car, I charge that from solar panels and from the grid. I’ve got a home battery installed so I can use my excess solar in the evening and also charge that up from the grid. Then I realised that my gas usage was contributing to my carbon footprint so I eradicated my gas hob, got an induction hob and I replaced my gas boiler with an air source heat pump which is also powered from my home battery and from the grid.
I decided to use a time of use tariff to save myself money basically. If I’d been using a standard variable tariff or a normal fixed energy tariff my energy costs would be through the roof, with the amount of electricity we use. Just by being on a time of use tariff over the last 125 days, I’ve saved over £1400 compared to what I’d normally be paying on a standard variable rate.
So after the pandemic, we’re all used to things being a bit more flexible, like you’ve got more flexible working hours, working from home and things like that. I see these innovative tariffs as being one more form of flexibility, you have more flexibility about how you use your electricity, how you pay for that electricity as well. For example, by rewarding you by moving into the off peak and cheaper, less dirty periods of electricity generation, you can actually save yourself quite a significant amount of money. And that’s all part of how society is moving.
My smart meter allows me to access these time of use tariffs by taking half hourly readings, so it knows what electricity I am using every half hour period, and it reports this back to my energy supplier, and then bill me accordingly to what I have used in those periods.
Being environmentally friendly is important to me, I obviously have taken some big steps like the home battery, solar power, the heat pump and things like that. But I’ve also taken little steps, and you can as well. For example, if you leave a TV on you can see that on your smart meter cause it comes up on the display as it's being a draw, so you can go around the house turning things off, and that saves you a little bit of money and saves the planet in return.
Please note: Eligibility may vary.
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