From boiling the kettle to charging an electric vehicle (EV) and powering a heat pump, we ask a lot of our electricity supply these days. But how do you choose which tariff is best suited for your everyday energy needs?
A lot will depend on where you are in your energy smart tech journey. Homes with solar panels, batteries and EVs will have very different needs from those still relying on more traditional set ups.
The three main types of tariff
Standard variable tariff: a supplier’s default tariff with the cost of each unit of gas or electricity controlled by the Ofgem energy price cap. Around 60% of households are on this tariff.
Fixed: your unit rates and standing charges are guaranteed not to change for the duration of the contract, usually one or two years. Some people like the price certainty as it can make household budgeting easier. You are protected against price rises but miss out if prices fall.
Smart: a variety of tariffs are available but all require a working smart meter as rates vary throughout the day and night. While anyone can have a smart meter, they’re particularly useful for high-tech households with heat pumps, EVs, solar panels or batteries. Tariffs offer cheaper energy during off-peak hours and higher rates at peak time. They can also allow households to export to the grid.
Smart tariffs are made for smart tech
For homes with smart tech, says Phil Steele, future technologies evangelist at Octopus Energy, “finding the right tariff is going to make a huge difference and should save you money”.
Being flexible about how and when you use power is key to keeping your bills as low as possible because electricity tends to be cheaper outside of peak times.
“The new generation of smart tariffs are designed to enable householders to use energy when it’s at its cheapest,” Steele adds. “It’s all about automation and timing.”
Taking advantage of cheap electricity is nothing new. Energy providers have for decades been offering off-peak tariffs for low-cost night-time energy.
But things have moved on, says Steele: “We can do things more intelligently now because cheap renewable energy is available at different times throughout the day.”
The secret to unlocking the flexibility of smart tariffs is smart meters. These have been installed in just over two-thirds of UK homes, and are provided at no extra cost by energy providers such as Octopus.
Smart meters allow consumers to manage their energy more efficiently by tracking energy use in real-time and providing more accurate, automated readings that can help them spot patterns, think about wasted power and adopt energy-saving habits. In-home displays are often the way consumers get to see this information.
But Octopus has gone one step further, developing the Home Mini, a palm-sized device that plugs in near a smart meter so consumers can receive live energy data straight to the Octopus App on their smartphone. The Home Mini was designed by Octopus to help give its customers even better data and insights on their usage.
“It’s only when you get the data and start to look at patterns that you realise how useful it can be,” says Steele. “That’s important in these turbulent times because energy has become expensive, so any tools and data that can analyse and cut use are a real boost for homeowners.”
Smart meters are also designed to help integrate smart home technologies such as EVs, chargers, home batteries and electric heating systems, so that they work together.
“For anyone who gets a heat pump or an EV, they’re going to be using more electricity,” he says. “It’s the smart tariffs that will unlock the tech’s full potential.”
For instance, the worst time to charge a car is between 4pm and 7pm; this is a peak period, when demand is high. Using an Octopus tariff such as Intelligent Octopus Go, you can still plug in your car at this time but the charging is automated. By telling the Octopus App when you next need the car, it will work out a charging schedule that uses the cheapest energy to meet your needs.
Additionally, users get six hours overnight when a low off-peak rate applies to the entire home, letting you run appliances or top up home batteries more cheaply.
Philip and Henriette*, from Oxfordshire, have been enjoying the benefits for the past few months. “Every night we use the super-low rate to charge our electric car, heat up the water tank, run the washing machine and recharge our home battery,” says Henriette. “In this way we can keep the use of expensive daytime electricity to a minimum. We can even sell some electricity to the grid during the evening peak.”
Cosy Octopus is a tariff specifically for heat pumps, which offers homeowners eight hours of cheaper energy, spread across three off-peak windows every 24 hours. “The electricity costs about half the standard rate,” says Clifford*. “We use more electricity during cheap windows and then ramp down during peak evening hours.”
There are also tariffs designed for homes with solar panels and batteries, such as Octopus Flux, an import and export tariff that provides peak, off-peak and standard rates, that allow customers to top up batteries at off-peak rates and sell to the grid at peak rates if they have spare capacity.
Of course, many homes now have more than a single piece of smart tech. One way in which Octopus is supporting these customers is a bolt-on called Charge Pack. Working with a range of Octopus tariffs, it automatically charges and discharges customers’ home batteries when the grid needs support.
So far, more than 1,500 households have signed up to the programme, and by helping to stabilise the grid during high-demand, households are paid a minimum of £12 a month just for taking part in the scheme.
“Bolt-ons like Charge Pack are making things easier all the time,” says Steele. “And by using power more intelligently, not only can smart tech homeowners potentially reduce their bills, they can earn money, too.”
*Surnames not being used at the request of Octopus
To find out more, and for details about all Octopus tariffs visit Octopus Energy
