90% of consumers like the ‘idea’ of ToU tariffs

A survey released this week by Smart Energy GB shows that the majority of consumers think that the idea of Time of Use (ToU) tariffs is appealing. Nine out of ten said they would consider such a tariff if it meant they would save money on their bills.

Smart Energy GB conducted the survey with the assistance of 1,500 respondents. Results showed that 90% of those who hadn’t previously been on or heard of a ToU tariff said they would find them appealing if they led to a reduction in energy bills. In addition to this, 69% said they would be inclined to use a ToU tariff if they were better for the environment.

The Smart Energy GB survey also discovered that consumers who work during the day would prefer to see ToU tariffs that offered cheaper energy at the weekends, rather than overnight. Those who weren’t in employment, predictably, would like cheaper periods during the weekday days.

Robert Cheesewright, Director of Corporate Affairs at Smart Energy GB, said:

“ As this research shows, smart meters will play a vital part in enabling households to use renewable energy and electric vehicles to make a real contribution to a more sustainable environment.

Having more customers on ToU tariffs can help to shift consumption to off peak times. This could lead to a more balanced network, paving the way for renewable energy to provide more of our needs. The reduction in strain on the grid would benefit traditional energy suppliers and producers too, with less need for maintenance leading to lower distribution costs.

Elsewhere in the world, ToU tariffs have been used for years. In Sweden, for instance, widespread smart meter adoption had taken place ten years ago, leading to hourly readings becoming law by 2012. This meant that all Swedish utility companies could offer a ‘timpris’, or ToU tariff, to their customers, with prices changing on an hourly basis.

Sweden has a somewhat different situation to the UK, in that they don’t use natural gas. They also have a much higher level of EV ownership, meaning there is a major peak in energy consumption in late afternoon, when everyone returns home to cook, put on heating and charge their EV.

Unfortunately, the take up of ToU tariffs in Sweden has been markedly low. Only 2% of customers have so far opted for this type of tariff, with many feeling it’s too complicated to understand. In response, tech companies are working on innovative apps to control in home energy, and even to automate savings to make the most of changing prices.

The Swedish government hope that this will stimulate a much more widespread uptake of this flexible approach to energy balancing.

If you’re looking for one of the earliest adopters of ToU functionality, however, you’ll need to look a bit closer to home. The UK was the very first nation to introduce a ToU tariff, back in 1978, in the form of Economy 7. While the Economy 7 and later Economy 10 tariffs have a bit of a love-hate relationship with the British public, they have paved the way for some far more interesting options.

In 2017, Green Energy UK launched the first dynamic energy tariff, known as TIDE. Shortly after, Octopus Energy too began testing Agile Octopus, the first half hourly tariff to be available in the UK. Results of the Octopus testing show that smart ToU tariffs can have, what they called, a ‘significant impact’ on consumer behaviour.

British Gas were the first of the Big Six to launch a ToU tariff, although theirs was only targeted at EV users. Launching in November last year, the Green Drive tariff offers cheaper energy between 12:30am and 7:30am so users can charge their cars more cheaply.

What the future holds for ToU tariffs remains to be seen. The potential to prevent overload or overdemand in a system which is increasingly renewables heavy is a promising prospect. However, it’s clear that nothing more will come about until the smart meter rollout is complete.

Further Reading

Ofgem lays out plans for energy suppliers to automatically refund surplus credit

Why are Challenger Energy Suppliers growing in popularity and how can they stay competitive?

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