What Are Time-of-Use Tariffs? Benefits, Savings and Smarter Energy Use

Thinking about switching your electricity tariff? You might have heard about time-of-use (ToU) tariffs—plans where the price you pay depends on when you use electricity. For homeowners with solar panels, a heat pump, EV, or a home battery, this could be a game-changer.

Here’s what you need to know—and how you can make the most of it.

Why ToU tariffs matter

Most UK homes (around 91%) are still on flat-rate tariffs, paying the same per unit no matter the time of day. But electricity isn’t equally expensive all day. By moving your usage to off-peak periods or storing your solar energy for the right time, you can pay less without using less energy.

Not every home benefits equally. Nesta’s research highlights three types of “tech-savvy” households that get the most out of ToU tariffs:

1. Electric-Heating Homes
Homes where heating is primarily electric, including heat pumps.
Why it matters: Heating is one of the biggest electricity uses in a home. These homes can save money by running heating or hot water at cheaper off-peak times, like overnight.

2. EV-Heavy Homes

Homes with one or more electric vehicles.
Why it matters: EV charging is flexible—you can easily schedule charging for overnight or other off-peak periods, avoiding expensive evening peaks.

3. Super-Tech Homes
Homes that combine electric heating and EVs, often with smart devices or automation.
Why it matters: With multiple large, flexible electricity loads, these households can shift a lot of their electricity use into off-peak hours, unlocking the biggest savings.

Even if your home isn’t exactly one of these types, you can still capture benefits by identifying flexible electricity use—like heating, EV charging, or appliance timing—and aligning it with cheaper periods.

How ToU works in practice

Most ToU tariffs split the day into bands: off-peak, peak, and sometimes shoulder periods.  Smart meters record your energy use every half hour, allowing suppliers to vary electricity prices depending on when you use it—so your bill reflects your actual usage times.

In simple terms:

• Off-peak periods: cheaper electricity (great for running your heat pump or charging your EV).
• Peak periods: more expensive electricity (so you want to avoid unnecessary use).
• Shoulder periods: moderately priced, useful for flexibility.

If you can shift even part of your daily consumption to off-peak hours, the savings add up. And if you have a home battery, you could charge it when electricity is cheap or from your solar panels during the day, then use that stored energy in the evening peak.

What this means for you

From a homeowner’s perspective, the benefits look like this:

1. Direct bill savings

If you can move enough electricity use into cheaper windows — washing, dishwashing, hot-water heating, EV charging, sometimes even cooking — the savings can be meaningful.

Nesta’s modelling assumes off-peak electricity can be around 40% cheaper, with peak periods around 60% more expensive. For homes with flexible loads (especially heat pumps and EVs), that difference adds up fast.

2. Indirect savings over time

The more households shift demand away from peak periods, the less strain there is on the grid. That means fewer expensive new power stations and network upgrades.

Regulators and the government estimate that this flexibility could reduce overall system costs — helping to cut bills for all consumers over time, even those who never switch to a ToU tariff.

3. More control over your energy use

You’re not locked into a fixed daily pattern. You decide when to run appliances, charge your EV, or heat water.

With timers and smart controls, much of this can happen automatically — giving you more influence over your energy costs without constant effort.

Stacking savings: Solar + Hea

t Pump + Battery

Here’s why this combination works so well:

1. Solar panels generate your own electricity during the day.
2. Most home batteries can store excess solar energy or charge during off-peak grid hours.
3. A heat pump uses electricity for heating and hot water, which can be scheduled for cheaper periods.

Nesta’s analysis shows homes with all three technologies on a ToU tariff have lower bills than homes with a gas boiler on a standard flat tariff.

Good to know: For homes with heat pumps, using a ToU tariff smartly could save up to £600 a year just by timing your electricity use to the cheapest periods.

Is a ToU tariff right for your home?

You’re most likely to benefit if you:

• Have electric heating, a heat pump, an EV, or other shiftable loads.
• Can automate or schedule usage with timers or smart devices.
• Are comfortable with a little planning around peak and off-peak periods.

Even if you’re not in the “tech-affluent” profiles Nesta studied, following these principles lets you capture many of the same benefits.

Getting started: simple steps

1. Check your smart meter: ToU tariffs require a smart meter that records half-hourly usage.
2. Understand your household’s flexible loads: Identify heating, EV charging, and appliance usage you can shift.
3. Consider automation: Smart thermostats and EV timers make ToU easy without constantly monitoring the clock.
4. Stack your tech: If you have solar panels or a battery, plan usage to maximise self-consumption and minimise imports at peak rates.
5. Review and adjust: Your routine might change with the seasons. Regularly check how your consumption aligns with cheap periods.
   
   

The bigger picture

By shifting your electricity use to cheaper periods, you’re not just saving money—you’re helping the grid run more efficiently and reducing overall emissions.