Tariffs

Before we embarked on this journey I couldn't even spell tariff, let alone explain it. I was vaguely aware of "Economy7" having lived in a rental property with ancient storage radiators. I was, however, completely unaware of the plethora of different tariffs available nowadays.

The reason tariffs have become so important is that energy suppliers have real difficulty in generating enough power for the peak usage periods - typically the early evening. To supply this demand is expensive because power stations have to be kept ticking over so they are ready to fire up at full power at short notice. Not only do they have to be kept ticking over, but they would not even have to be built were it not for this need.

In some ways, wind power and solar power make matters worse. Although they can generate power more cheaply than gas or coal, the power is only available when the wind blows or the sun shines. Electricity suppliers can incentivise users to avoid consumption during the peak period. They may, on occasion, even PAY users to take power when there is a glut.

Taking advantage of some of the more esoteric tariffs can be a complicated business. On one tariff the kWh price changes every half hour and is published one day in advance. Taking full advantage of this requires your home to have a high level of automation. Other tariffs are easier to deal with - with cheap, standard, and peak rates at fixed times.

To add to the complexity there are also EXPORT rates whereby surplus power from your SolarPV installation can be sold to the electricity company. Sometimes these are an integral part of the one tariff and sometimes you have to sign up for separate import and export tariffs. In the early days of SolarPV the government offered generous "Feed In Tariffs" (FiTs) whereby you got paid well for exported power and even got paid for every kWh you generated whether you exported it or not. When new FiTs were stopped (existing agreements are still being honoured) the rate fell to between about 3p and 5p per kWh. Fortunately, the electricity companies are begining to offer more generous rates, although they will still limit which import and export tariffs you can mix and match.

On the face of it, the export rates always seem very low compared to the import rates. This is said to be because the consumer uses the electricity network, which they don't pay for, to export their power wheras the electricity company must provide this infrastructure to deliver power. Thi kind of makes sense, until you realise that we all pay a daily standing charge which is supposed to cover that. The big mistake is to imagine that the electricity market actually makes sense. Why, for example, do high wholesale prices for gas increase the standing charge?

Anyway, having said all that, there remains the task of understanding what is available. If you own an Electric Vehicle or Heat Pump you may be eligible for tariffs not available to everybody.

My advice on this point is simple: go to the Octopus Energy Website. I say this, not because they are necessarilly the best provider, but because they have a very comprehensive selection of tariffs. You can get a very good idea of the sort of variations on a theme you are likely to meet across all suppliers.

It would be impossible to document in detail all of the considerations when we selected our tariffs. Briefly, we chose tariffs from Octopus Energy for the following reasons:

• Because we have an Air Source Heat Pump we were eligible for the Octopus Cosy tariff. This has a standard rate that is no higher than the standard variable tariff. It also has TWO cheap rate periods (-40%); one three hour period at night and another in the early afternoon. The down-side is that there is a peak rate period (+60%) for three hours every evening.
• We liked the fact that the standard rate was, well, standard.
• The afternoon cheap rate provides an opportunity to charge our batteries on sunless days.
• The simple, easilly remembered, structure of the tariff allows us to make use of the cheap rate using habit and/or simple timers on our washing machine, dish washer, and plug-in hybrid vehicle.
• We have been able to avoid consuming almost all power during the peak period.
• This tariff can be combined with an export tariff of 15p per kWh. Not the highest available, but not bad either, considering that we expect to export very little.

In our case, the change from the standard variable tariff to Octopus Cosy (given that we have batteries) has resulted in savings of a similar magnitude to those from generating "free" power from the sun. It all adds up.

Having said all that, as pointed out before, our electricity usage is not at all typical. You experiences may be very different.

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Since this was written, we have switched to Octopus Agile (for Import). We are still on Octopus Outgoing (Fixed 15p) for export. We did this becasue the Octopus Compare app showed that, even tailoring our usage to Cosy, Agile was significantly cheaper from about the second week of March 2023 onward. We will be keeping an eye on the relative costs (using Octopus Compare) because the situation is likely to reverse before winter.