In the UK we’ve generally been used to fixed-price electricity tariffs, where we pay the same for each kWh of electricity no matter when we use it. (The exceptions to this being “Economy 7” which is installed in some homes and charges a lower rate overnight, using a meter with different registers for Daytime and Nighttime usage, and some very large consumers who have more sophisticated meters which record readings every half-hour.)

This is mostly OK but it doesn’t reflect the varying costs of generating electricity to meet different levels of demand – it’s more expensive to generate (and transmit) electricity when overall usage is close to the peak. It would be more efficient to smooth out the peaks and troughs of demand by encouraging people to use less electricity at peak times and shift their consumption to off-peak times. In other countries there have been variable-rate tariffs for some time and with the introduction of Smart Meters in the UK we’re starting to see some crude variable-rate tariffs appearing here too – one of the first is the TIDE tariff from Green Energy which charges a normal rate most of the time, a very low rate overnight and a high rate between the peak times of 16:00 – 19:00 on weekdays.

I refer to that as a “crude” variable-rate tariff since it doesn’t take account of other factors – especially the varying levels of solar and wind power that are completely dependent on the weather and may or may not align with peaks of usage. In the future I’d expect some more dynamic variable tariffs to appear which might – for example – offer a low rate in the middle of the day on sunny weekends when there’s a lot of solar generation.

With a solar PV installation taking care of the majority of daytime usage, having a much lower rate overnight seems rather appealing, as long as the usage during the peak time period (especially in winter) doesn’t offset the savings. Time for a bit of work with a spreadsheet, I reckon.