A time-of-use tariff is an electricity tariff with unit rates that change depending on when you use power. Electricity is cheaper at off-peak times, usually overnight or in the middle of the day, and dearer at peak times, typically late afternoon and early evening.
Main types
| Type | How prices are set | Meter needed |
|---|---|---|
| Economy 7 | Two fixed rates; about 7 cheaper hours, usually overnight | Two-rate meter or smart meter |
| Economy 10 | Two fixed rates; about 10 cheaper hours, often split across the day | Two-rate meter or smart meter |
| Static smart tariff | Fixed peak and off-peak bands set in advance, sometimes more than two | Smart meter |
| Dynamic or agile tariff | Rates change, often every half hour, following wholesale prices | Smart meter |
Economy 7 is the oldest kind. It was designed for night storage heaters and works with older meters that switch rate at fixed times. Newer tariffs rely on smart meters, which record use in every half hour. Ofgem’s reform of electricity settlement, which bills suppliers on actual half-hourly use instead of average profiles, is intended to make such tariffs easier to offer.
Rules in Great Britain
The energy price cap covers default multi-rate tariffs such as Economy 7. For these, the peak and off-peak unit rates together cannot exceed the level set under the cap. Rates for Economy 7 vary by region and by supplier, and the times of the cheaper hours depend on your meter and area.
Why it matters
A time-of-use tariff can cost less if you can move a large share of your use to cheaper hours, for example by charging an electric car overnight, running a heat pump with a hot water tank, or charging a home battery. If most of your use falls at peak times, you may pay more than on a single-rate tariff. Checking your half-hourly usage data before switching helps you judge this.
For the grid, shifting demand away from the evening peak reduces the need for extra generation and network capacity, and makes better use of wind and solar power when it is plentiful. This is general information, not financial advice.
Read more: How to save energy at home: practical tips for UK households.