Time of use tariffs explained

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

You'll need energy meters that can determine how much energy you use at certain times of day to access them. In the past, this meant meters that counted your electricity use using two different dials, one for peak and one for off-peak times. Smart meters can do the same thing remotely, so some energy companies are starting to offer time of use tariffs to smart meter customers. 

Not all energy suppliers offer them, and they're not usually available through price comparison websites.

Whether they are right for you will depend on how much electricity you are able to use at off-peak times - which are usually overnight. Time of use tariffs can work out well if you're able to use a high proportion of your electricity during the cheaper hours.  

But peak rates are often very pricey, so if you have to use lots of electricity during normal daytime hours, a TOU tariff could see you overpaying compared to a single rate tariff.

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 four categories. 

• Economy 7
• Economy 10
• Smart
• Dynamic

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.

Economy 7 tariffs

Economy 7 gives seven hours of cheaper electricity overnight. The cheaper energy 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 provide two readings:

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

As with most time-of-use tariffs, 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 require radio Teleswitch technology (RTT) to function correctly. The government has announced that the RTT will be switched off on 30th June 2025. Any customers with an older Economy 7 meters will need to switch to smart meters before that date if they wish to continue to make use of the tariff. 

Before you sign up for an Economy 7 tariff, it’s worth checking your usage to make sure you get the most out of it. Using less than 30% of your electricity during the cheaper night-time hours could mean that you’d 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. They are less widely available than Economy 7, and very few suppliers offer these tariffs. 

You’ll either need a smart meter or an Economy 10 meter to take advantage of these tariffs. Older Economy 10 meters are, for the most part, phased out, so it’s likely you will need to have a smart meter installed if you have a standard meter and want to sign up for an Economy 10 tariff. 

As with Economy 7, Economy 10 tariffs are only available for electricity-heated homes and not those with a gas supply. 

If you have a time of use tariff that uses an Economy 10 meter, check that your meter is reading the correct time. We've had reports in the past of meters being set to the wrong time and, therefore recording usage incorrectly.

Smart time of use tariffs

Some providers, including British Gas, Octopus Energy, and Ovo Energy, have tariffs that are cheaper for electricity used at less popular times of day.

Smart time of use tariffs charge different rates for electricity during peak hours, off-peak hours and shoulder hours. Peak hours are when the demand is highest, off peak is when demand is lowest and shoulder hours are when demand is somewhere between peak and off-peak. 

Dynamic time of use tariffs

Unlike Economy 7 and Economy 10, which have set peak and off-peak hours, dynamic tariffs will change the time and rates each day. 

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 used correctly
• More sustainable as they encourage customers to use more energy when there is less demand on the grid and less during peak hours
• A great option for EV owners
• Can significantly cut energy bills when used in tandem with solar panels and heat pumps

Cons of time of use tariffs

• Not suitable for those who use more electricity during peak hours
• Peak prices might be higher than rates on a fixed or variable tariff
• May require a new meter installation
• Complex and could result in higher-than-expected bills if used incorrectly

How to save money with time of use tariffs

To get the most out of a time of use tariff, try to use electricity during the cheaper hours as much as you can. Some simple ways to maximise your savings with time of use tariffs include:

• heating your home with electric storage heaters
• using a timer to heat your water during cheap hours
• charging an electric vehicle during cheaper hours
• running some appliances overnight (though for safety reasons, you shouldn't leave your washing machine, dishwasher or tumble dryer running when you're asleep).

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.

Energy companies with more than 50,000 customers must make their single-rate tariffs available to customers with restricted meters (ones that allow you to be charged a lower rate at off-peak times). This includes Economy 10 meters and white meters. 

If you think you’d be better off on a single-rate tariff and will need a new meter, most big suppliers won't charge you to install it.

Some suppliers will just add your two readings together rather than change your meter.

Contact your supplier if you would like to switch away from your time of use tariff to a single rate.

EV chargers

With the increasing adoption of electric vehicles, many energy suppliers now offer tariffs specifically designed for EV owners. While these aren’t advertised as such, they are time of use tariffs as they offer cheaper rates during off-peak times. 

These tariffs often require a compatible car charger that connects to the smart meter and turns on automatically during off-peak times and off again when rates are higher. 

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

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.  Usually, 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.

If you have a time-of-use electricity tariff, you could save money by charging your battery when electricity is cheaper and using the power from it at peak times to avoid buying from the grid.

There are two types of battery installation: DC and AC systems. The type you install is important as DC systems can’t be charged from the grid, according to the Energy Saving Trust.

Find out more about solar panel battery storage.