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Choosing an energy tariff can feel overwhelming. Fixed, variable, time-of-use, smart… It’s not always clear what the difference is — or which one actually saves you money.
The good news? Once you understand how each tariff works, the decision becomes much simpler.
In the UK, energy tariffs fall into three main categories recognised by Ofgem.
Let’s break them down clearly and practically — so you can decide what works best for your home, lifestyle, and budget.
1. Standard Variable Tariff (SVT) – The Default Option
If you’ve never switched, or your fixed deal ended and you didn’t choose a new one, you’re probably on a Standard Variable Tariff (SVT).
How it works:
- Your unit rate (price per kWh) and standing charge can change.
- Prices are limited by the energy price cap set by Ofgem.
- There are usually no exit fees, so you can leave anytime.
Important: The price cap is not a bill cap
The price cap limits the rate per unit, not your total bill. If you use more energy, you pay more.
Who it suits:
- Homeowners who want flexibility.
- Those waiting to switch or are unsure what to choose.
- People who value no exit fees.
Downsides:
- Prices can go up as well as down.
- Rarely the cheapest long-term option.
Best for: Short-term flexibility, not long-term savings certainty.
2. Fixed-Rate Tariffs – Certainty & Stability
A fixed-rate tariff locks in your energy prices for a set period, usually 12 to 24 months.
How it works:
- Your price per kWh stays the same for the contract term.
- Standing charges are often fixed too.
- You may pay exit fees if you leave early.
Under certain rules from Ofgem, suppliers can move you onto another fixed deal at the end of your term — as long as it’s no more expensive than the SVT and has no exit fee.
Why homeowners choose fixed deals:
- Budget certainty.
- Protection from sudden market price rises.
- Easier monthly planning.
Potential drawbacks:
- If market prices fall, you won’t benefit.
- Exit fees can limit flexibility.
Best for: Households who want predictable bills and peace of mind.
3. Flat-Rate Electricity Tariffs – Simple & Familiar
Most UK households are effectively on a flat-rate electricity tariff.
How it works:
- Same price per kWh at all times of day.
- No peak or off-peak variation.
According to research from Nesta, around 91% of GB households remain on flat-rate pricing.
Who it suits:
- Homes with fairly consistent energy use.
- People who don’t want to think about timing their usage.
- Households without smart meters.
Best for: Simplicity.
4. Time-of-Use (ToU) Tariffs – Smart Savings
Time-of-use tariffs are part of the new wave of smart energy pricing.
How they work:
- Energy costs less at off-peak times (often overnight).
- Costs more during peak demand (typically early evening).
- Require a smart meter.
Research from Nesta shows around 9% of households now use time-of-use electricity tariffs — and that number is growing.
Who benefits most?
You’re more likely to save if you have:
- An electric vehicle (EV) that you can charge overnight.
- A heat pump.
- Electric heating.
- Appliances you can run off-peak (dishwasher, washing machine).
Nesta-commissioned research suggests heat pump owners could save up to around £600 per year by moving from a standard tariff to a time-of-use tariff — even without optimising usage perfectly.
The catch:
If most of your usage happens at peak times and you can’t shift it, your bills could increase.
Best for: Homes with flexible, shiftable electricity demand.
5. Block Tariffs – Rare but Different
Block tariffs charge different rates depending on how much energy you use.
For example:
- First X kWh at one price.
- Additional usage at another price.
They’re uncommon today and used by only a small minority of households, according to Nesta.
Best for: Very specific usage patterns — rarely the mainstream choice.
Quick Comparison
| Tariff Type | Price Changes? | Flexibility | Best For |
|---|---|---|---|
| Standard Variable | Yes (within price cap) | High | Short-term flexibility |
| Fixed-Rate | No (during term) | Medium (exit fees possible) | Budget certainty |
| Flat-Rate | Same price all day | High | Simplicity |
| Time-of-Use | Cheaper off-peak, dearer peak | Medium | EV/heat pump homes |
| Block Tariff | Changes by usage level | Low–Medium | Niche cases |
How to Decide Which Tariff Is Best for You
Instead of asking “Which tariff is cheapest?”, ask:
1. Do I value certainty or flexibility?
- Want stable monthly costs? Fixed-rate
- Want freedom to switch anytime? SVT
2. Can I shift when I use electricity?
- Yes (EV charging, smart appliances)? Time-of-use
- No (family home with evening-heavy usage)? Flat-rate or fixed
3. Am I planning home upgrades?
If you're considering:
- Solar panels
- Battery storage
- Heat pumps
- EV charging
A time-of-use tariff may become far more attractive in the future.
4. How engaged do I want to be?
Some homeowners enjoy optimising their energy usage. Others prefer “set and forget.”
Choose a tariff that matches your lifestyle — not just headline savings.
Want a Simpler Way to Compare? Consider a Switch Together Energy Switch
Even once you understand tariff types, comparing deals can still feel time-consuming.
Rates change. Exit fees vary. Standing charges differ by region. And it’s not always obvious which tariff genuinely works best for your home.
That’s where a Switch Together energy switch can help.
Switch Together runs group energy switching schemes in partnership with councils and community organisations across the UK.
Instead of you comparing dozens of tariffs on your own, Switch Together:
- Brings households together to increase buying power
- Invites vetted suppliers to compete in an auction
- Secures a competitively priced tariff for participants
- Provides clear, personalised offers
You stay in control the whole time — there’s no obligation to switch.
What If You Have Solar Panels or a Heat Pump?
If your home has both solar panels and a heat pump, your energy setup is very different from the “typical household” used in national averages.
You’re generating electricity.
You’re using more electricity (because you’re heating your home with it).
And you have more flexibility than most.
That changes which tariff makes sense.
How Solar + Heat Pumps Change the Equation
1. You use more electricity overall
Heat pumps run on electricity rather than gas. That means your electricity consumption is higher than the UK average — especially in winter.
Because of that:
- Small differences in unit rates matter more.
- Peak vs off-peak pricing can significantly affect your bills.
2. Solar reduces daytime imports
Your solar panels generate most of their electricity during daylight hours — often when grid electricity isn’t at its cheapest.
In summer, you may:
- Use much of your own generation.
- Export excess electricity back to the grid.
In winter, however:
- Solar output drops.
- Your heat pump demand rises.
This seasonal mismatch is key when choosing a tariff.
Which Tariffs Work Best With Solar + Heat Pumps?
Fixed-Rate Tariffs
If you prefer predictable bills and don’t want to think about timing your usage, a fixed tariff offers certainty.
Best for:
- Homeowners who value budgeting simplicity.
- Households without battery storage.
But it won’t reward you for shifting usage.
Time-of-Use (ToU) Tariffs
This is where things get interesting. Because heat pumps can be:
- Pre-heated before peak hours,
- Timed overnight,
- Paired with smart controls, you may be able to shift part of your electricity demand to cheaper off-peak periods.
Research highlighted by Nesta suggests heat pump owners could save significantly by moving from a standard tariff to a time-of-use tariff — even before fully optimising usage.
You benefit most if you:
- Have smart heating controls.
- Can run your heat pump slightly earlier to avoid peak prices.
- Have a home battery that stores cheap or solar electricity.
- Charge an EV overnight as well.
However:
- If most of your heating demand falls during expensive evening peaks and you can’t shift it, costs could rise.
The Role of Export Tariffs
If you generate surplus solar electricity, your export rate matters too.
While the standard import tariff determines what you pay for electricity, your export tariff determines what you’re paid for surplus generation.
Some time-of-use import tariffs pair well with competitive export rates — but not always. It’s important to look at both sides together.
A Smarter Strategy for Solar + Heat Pump Homes
Instead of asking:
“What’s the cheapest tariff?”
Ask:
- When does my heat pump run most?
- How much electricity do I export annually?
- Can I shift heating slightly earlier in the day?
- Do I have (or plan to add) battery storage?
- Am I home during the day to use more of my solar power directly?
For many solar + heat pump households:
- Winter strategy matters most (high-import months).
- Off-peak electricity access becomes valuable.
- Flexibility beats simplicity — if you’re willing to engage with it.
