Time of use tariffs explained

Time of use (TOU) tariffs, sometimes called multi-rate tariffs, offer cheaper electricity at off-peak times. These times are usually when there is lower demand on the National Grid.  

You'll need an electricity meter that can measure how much power you use at certain times of day to access them. 

In the past you'd have needed a meter than counted your electricity using two different dials, one for peak and one for off-peak times. You might have come across these Economy 7 or Economy 10 meters. 

Now, smart meters can do the same job. That means energy companies have an increasing choice of smart time of use tariffs for homes with smart meters.

Whether time of use (TOU) tariffs are right for you depends on how much electricity you can use at off-peak times - usually overnight. They can work out well if you're able to use a high proportion of your electricity during the cheaper hours.  

But they're not right for everyone. Peak rates are often very pricey, and higher than typical energy costs. If you have to use lots of electricity during these hours, a TOU tariff could cost you more than a single rate tariff.

You won't typically find them on price comparison websites so you'll need to check energy providers' websites.

See the latest cheapest deals on the energy market: our guide to how to get the best energy deal

Types of time of use tariffs

Most time of use tariffs fall into five categories. 

• Smart tariffs available to all smart meter customers
• Smart tariffs tied to a particular technology - including EV tariffs, heat pump tariffs and tariffs for storage batteries
• Economy 7
• Economy 10
• Dynamic - also called 'agile' tariffs

There are various factors to consider before signing up for a time of use tariff. Here's what you need to know about the various options available. 

Use our free, independent energy comparison service to compare gas and electricity prices and find the best provider for you. Or find out more about other types of energy tariffs explained.

Economy 7 tariffs

Economy 7 gives seven hours of cheaper electricity overnight. The cheaper period usually runs between midnight and 7am; however, this varies across suppliers. Some energy companies also offer extra hours during winter. Economy 7 and Economy 10 are sometimes referred to as legacy time of use tariffs. 

Economy 7 meters give two readings:

• One for more expensive electricity used during the day.
• Another for cheaper night usage.

Economy 7 is only available for electricity-heated homes and not those with a gas supply. It can be a good option if you use storage heaters or Economy 7 hot water cylinders. 

You’ll either need a smart meter or an Economy 7 meter to take advantage of these tariffs. Older Economy 7 meters use the Radio Teleswitch Service (RTS) to function correctly. This is expected to be switched off by the end of 2026, according to energy regulator Ofgem. If you have one, you'll need to switch to smart meters to keep using this type of tariff. 

For an Economy 7 tariff to be financially worth it, you'll need to use at least 30% of your electricity during the cheaper night-time hours. If not, you could pay less on a single-rate electricity tariff (where the charges are the same, regardless of time).

Read more: how to estimate your energy use

Economy 10 tariffs

Economy 10 gives 10 hours of cheaper electricity, usually in three time periods throughout the day. These are often overnight or very early morning, late evening and mid-afternoon. 

Like Economy 7, Economy 10 tariffs only work with electricity-heated homes and not those with a gas supply. 

You’ll either need a smart meter or an Economy 10 meter for these tariffs. However, older Economy 10 meters are largely phased-out and few suppliers still support these tariffs. 

Instead, if you don't already have an Economy 10 tariff, it's worth investigating modern smart tariffs.

Smart time of use tariffs

There's an increasing choice of smart time of use tariffs from providers including British Gas, E.ON Next, EDF Energy, Octopus Energy, Ovo Energy and Scottish Power as well as smaller from smaller firms including 100Green, Fuse Energy, Good Energy and So Energy.

Smart time of use tariffs charge at least two different rates for electricity used during:

• peak hours - when demand is highest (weekday evenings, for example)
• off peak hours - when demand is lowest (overnight, for example)

Some also have a third rate for standard hours - when demand is somewhere between peak and off peak.

Most time of use tariffs are static. That means that they have fixed schedules and prices that follow a regular pattern, so you know what you'll be paying and when.

They may have daily or weekly schedules. For example, these tariffs might have:

• different weekend and weekday prices
• different daytime, evening or overnight prices

If your smart tariff is attached to an EV charger, you may also have set hours during which you can cheaply charge your electric vehicle.

You'll need a smart meter to access these tariffs. Your smart meter will need to be set up to provide automatic meter readings every 30 minutes, so that your provider can bill you accurately for electricity used in each period.

Don't have a smart meter yet? Here's what to expect from a smart meter installation

EV tariffs

With the increasing adoption of electric vehicles, many energy suppliers now offer tariffs specifically designed for EV owners. 

These offer cheaper rates for charging your car in two ways:

1. Cheaper overnight electricity on a two-rate tariff - so you can also use the cheap power for other appliances.
2. An 'add-on' to an existing tariff where the cheaper rate is only for charging your EV - you can charge it at any time but all your other electricity use is at your usual (higher) tariff rates.

The first option is more common. To get either type you'll often first need to be a customer of the supplier, then ask it to switch to its EV tariff or 'add-on' EV charging.

You might also need a compatible car charger that connects to your electricity smart meter and turns on automatically during off-peak times and off again when rates are higher. 

You're unlikely to find EV tariffs on price comparison websites so you'll need to work out your best option manually:

• Work out how much electricity your EV uses (the kWh needed to charge your car for your expected annual mileage)
• Calculate how much it'll cost to charge on the tariff (using the overnight or charging 'add-on' prices)
• Find out how much electricity your household uses in a year (find this in your energy company's app or an old statement. Remember to deduct your car's use)
• Calculate how much your other electricity use will cost (using the peak day rates)
• Add those together. If you also use gas, you'll need to add that on too.
• Get a quote for a regular tariff (using a price comparison service or supplier's website. Remember to put in your total use, including EV charging).
• Compare the two to see what's cheapest for you.

Planning on purchasing an EV? Here's what you need to know about charging your electric car at home.

Heat pump tariffs

Heat pump tariffs are designed for homes with air-source or ground-source heat pumps. They provide cheaper periods of electricity each day.

British Gas, E.ON Next, EDF Energy, Octopus Energy and Scottish Power are among suppliers offering specific heat pump tariffs. 

Depending on the supplier, you can get between five and 10 hours of cheaper electricity per day. This can be in one block of time (e.g. 6am - 4pm), two blocks (e.g. 4am - 7am and 1pm - 4pm) or three blocks (e.g.  4am - 7am, 1pm - 4pm and 10pm - 12am).

How pricing works varies too. We've seen:

• A set, cheaper rate per kWh regardless of where you live
• A discount compared with your region's standard tariff.

Some heat pump tariffs also come with a pricier peak rate between 4-7pm. This is typically above the standard tariff rates, and we've seen up to as much as 50% pricier. You'll need to make sure you can limit your usage of energy intensive appliances (such as washing machines, dishwashers, tumble dryers and some kitchen appliances) during these time windows. 

You'll need a smart meter set-up to take electricity meter readings every half hour to make sure you're charged correctly.

You don't have to choose a tariff specifically designed for a heat pump. Other types of time-of-use tariffs will also help cut costs. Here's what to consider:

• How many cheaper hours of electricity you'll get, per day
• How much cheaper the rates are
• If there are any periods of higher 'peak' rates, when, and how pricey they are

Heat pumps don't typically turn on and off throughout the day in the same way that a gas boiler does. A heat pump uses roughly the same amount of electricity every hour of the day, if it's set up to deliver steady warmth. You can save money just by being on a typical time-of-use tariff, according to a study by energy consultancy Cornwall Insight.

But if you can use your heat pump flexibly, you should be able to save more. 

Find out what it's really like to have a heat pump.

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Smart tariffs for storage batteries

One way to make the most of time of use tariffs is to install a home storage battery. 

These batteries store your electricity for later use, making your energy system more independent from the National Grid.  Often battery storage is used alongside solar panels, but it can also be used with an energy tariff that offers cheaper electricity at off-peak times.

Dedicated smart storage battery tariffs typically have cheaper rates overnight so you can charge up your battery and use the power during the day when it'd be pricer to buy.

Several providers offer them, including British Gas, E.ON Next and EDF Energy.

Some tariffs also pay you if you export electricity at peak times. For example Octopus Energy's Octopus Flux. 

If your battery management app can automatically charge and discharge based on the tariff price, you're likely to benefit the most from this type of tariff.

Here's what to check if you're choosing a smart tariff for a storage battery:

• Is the tariff compatible with your battery? Some only work with specific systems
• How cheaply can you charge, and when?
• Will it pay you to export power, how much and when?
• Does it charge high rates if you import power at peak times? Can you avoid these?

Find out more about solar panel battery storage.

Dynamic time of use tariffs

Unlike static tariffs, which have set prices for specific periods of time, dynamic tariffs change the time and rates each day. 

They're also called real-time pricing because rates are set close to the time you actually use the electricity and are based on wholesale electricity prices.

For example customers on Octopus Energy's Agile tariff find out the electricity unit rates they'll pay for the next 24 hours between 4-8pm daily.

Prices on these tariffs can drop below zero – so you're paid to use electricity – if enough excess electricity is being generated than used to the point that suppliers are paid to take electricity off the grid.

But prices can spike suddenly too, leaving you paying far more than those on other tariffs for a short period. 

Octopus says that 'price spikes are short-lived, typically lasting 30 minutes to an hour'. It has capped unit rates on its Agile tariff at 100p/kWh to protect customers from the biggest shocks.

Saving Sessions, PowerUp and other time of use options

Many suppliers run timed events at short notice where customers can earn rewards or bill credit for changing the amount of power they use compared to normal.

Examples include Octopus Energy's Saving Sessions or E.ON Next's PowerUp.

You might be asked to use as little electricity as possible or to use more electricity than usual in the time slot.

The aim is to help balance the amount of electricity being added to the grid with the amount being used. So you might be asked to:

• use less electricity when there's a lot of demand on the grid, or
• use more electricity when greener cheaper electricity is abundant (e.g. it's a windy day).

Customers typically get an email or a text telling them the time of the event. You usually need to opt-in to take part.

They tend to be short: one or two hours. You'll need a smart meter to take part. 

See more tips for how to use your smart meter reading data

What are the pros and cons of time of use tariffs? 

As with all energy tariffs, time of use tariffs have obvious benefits as well as downsides. 

Pros of time of use tariffs

• Can result in lower electricity bills if you're able to move lots of your electricity use to cheaper hours
• More sustainable as they encourage customers to use more energy when there is less demand on the grid and less during peak hours
• Help cut the costs of running an EV or heat pump
• Can significantly cut energy bills when used in tandem with solar panels and batteries.

Cons of time of use tariffs

• Not suitable for those who need to use more electricity during peak hours
• Peak prices can be higher than rates on a fixed or variable tariff
• May need a new smart meter installed to track half-hourly electricity use
• Complex and could result in higher-than-expected bills if used incorrectly
• When wholesale prices are high, dynamic time of use tariffs are pricey.

Could I save money with a time of use tariff?

To get the most out of a time of use tariff, you'll need to use as much electricity as possible during the cheaper hours. Here are some ways to maximise your savings: 

• use a timer to heat your water during cheaper hours
• charge your electric vehicle only during cheaper hours (some can be set-up to do this automatically)
• heating your home with electric storage heaters, if you have them
• run appliances during cheaper hours, either by using inbuilt timers or smart plugs (for safety reasons, you shouldn't leave your washing machine, dishwasher or tumble dryer running when you're asleep)
• take note of how much your appliances cost to run, so that you can prioritise your efforts accordingly. For example, white goods such as washing machines, tumble dryers and dishwashers use a lot more energy than gadgets such as TVs, phones and laptops. Modern lighting has very low energy use, so you don't need to sit in the dark at peak times. 
• monitor your energy use (using your smart meter monitor or online account/ app) to check whether you're using at least 30% of your electricity at cheaper rates.

If you're using less than 30% of your electricity at the cheaper rate, you might be better off on a single-rate electricity tariff (one that charges the same rates regardless of when you use electricity).