Time of use tariffs: Loop's plans
Hi, my name’s Steve and I’m from the product team at Loop. In this Blog article, I’m going to introduce you to time of use tariffs, explain why they’re important and Loop’s plans to work with time of use tariffs in future.
What are time of use tariffs?
The cost of producing and distributing electricity changes throughout the day and throughout the year. If you can use more energy at the cheapest times and less at the most expensive, then the grid saves money. But can you save money? This is where time of use tariffs come in.
Smart meters measure energy use every half-hour. A time of use tariff can have a different price in each of these half-hour periods and so reflects the different costs of electricity throughout the day. Most time of use tariffs have two or three distinct pricing periods with a peak in the early evening, a low overnight, and the rest of the time being somewhere in the middle. If you can move your usage to the cheaper periods both you and the grid win!
Not all time of use tariffs are this simple. Octopus’ Agile tariff, for example, changes price every half-hour of every day with occasional periods when the home is paid to use energy. If you can automate your home to respond to the price signals your bill can fall substantially.
Will time of use tariffs help us hit net-zero?
The UK is in the middle of an electricity revolution. Renewables such as wind and solar are making up a larger share of the grid, replacing old fossil fuel generation. But these renewable energy sources are variable and change based on the weather.
At the same time, customer’s are gaining the ability to schedule when to use significant volumes of electricity as petrol cars are replaced with electric. Adding 30 miles of charge to an electric car uses the same amount of electricity as an average home uses in a day. Schedule the charge for overnight when the prices are lowest and you can cut your charging bill by more than half.
The grid saves money, the home saves money and the UK’s carbon emissions fall. It’s a compelling story.
What are Loop’s plans?
Loop’s mission is to enable our users to slash their carbon emissions. We believe empowering customers to shift their energy to cheap times will be a key enabler of renewable electricity at low cost.
But time of use tariffs aren’t currently supported by Loop. Why not and what are the challenges?
The first challenge is that UK energy tariffs are more complex than you’d expect. Until very recently, there were around 70 energy companies in the UK. Of these, most have multiple tariffs. And these tariffs are different in each of the 10 different UK electricity regions. It adds up to tens of thousands of tariffs. But worse than this: there is no standard for publishing these tariffs. If each supplier published their tariffs in the same format on a specified page on their website we could readily compile a full tariff list. They don’t.
The second challenge is that we’re a small team - there are around 20 of us and there’s lots that we want to do! Time of use tariffs are growing within our customer base but are still relatively niche, so we’re prioritising adding more widely-used functionality, such as gas, first.
Those challenges aside, our mission is to reduce carbon emissions in UK homes. We believe time of use tariffs will be a key tool to get there so Loop will support them in the future, helping you minimise both your fuel bill and your carbon emissions.
About the author
Steve Buckley is in charge of product direction at Loop and has been with Loop since it was founded. He has a background in statistics and data science, and has worked at multiple successful startups.
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