How do Smart Time of Use (TOU) tariffs work?

Last reviewed: 03 November 2026

Electricity is often more expensive at certain times of the day, but what if you could take advantage of cheaper rates? Smart time of use (TOU) tariffs let you pay different prices depending on when you use electricity, potentially helping you cut your energy bills. However, they do not suit every household, and using electricity at the wrong time could leave you paying more. So, are these tariffs worth it, and how can you tell if one is right for you?

This guide explains how these tariffs work, which types exist, who they suit, how to work out whether you would save and how export tariffs fit alongside them.

What is a smart time of use tariff?

Most energy tariffs have two parts:

• A standing charge: the daily amount you pay to stay connected to the energy supply, whether or not you use any energy.
• A unit rate: the price you pay for each kilowatt hour (kWh) of energy you use.

On a standard electricity tariff, you pay the same price per unit no matter what time of day you use electricity. A time of use tariff works differently: the price changes depending on when you use electricity.

Electricity is usually cheaper during off-peak hours, such as overnight, and more expensive during peak hours, when demand is higher. Some tariffs also have a middle period with rates between the two. Your standing charge stays payable regardless of when you use electricity.

To track when you use electricity, these tariffs generally require a smart meter. It records your electricity use in half-hourly intervals, allowing your supplier to charge you the rate that applies at the time you use it.

How do time of use tariffs work?

The cheaper and more expensive periods depend on your supplier and tariff. Early evening is often a peak period because electricity demand tends to be higher, while overnight rates are commonly cheaper.

For example, a tariff might charge more between 4pm and 7pm and less overnight. These are illustrative hours, not standard times across all tariffs, so check the exact periods before signing up.

Time of use tariffs fall into two broad groups.

• Static tariffs: the prices are fixed in advance, and the time blocks follow a regular pattern. Economy 7 is the best-known example, with cheaper electricity overnight and higher prices during the day. Economy 10 offers a longer or split off-peak period. Some tariffs have different rates for weekdays and weekends.
• Dynamic tariffs: The unit rate changes frequently in response to wholesale electricity prices. With tariffs such as Octopus Agile, prices can change throughout the day, allowing you to take advantage of cheaper periods when electricity is plentiful. However, prices can also rise sharply during periods of high demand.

Some dynamic tariffs can even have negative prices, meaning customers may be paid to use electricity during certain periods. These events are not guaranteed, and you should check the tariff's terms and charges before signing up.

What types of time of use tariff are there?

Time of use tariffs come in several forms, depending on how prices are set and the technology you use at home.

• General smart tariffs: Available to eligible smart meter customers, these offer set cheaper and more expensive periods.
• Electric vehicle tariffs: Designed to make charging an electric car cheaper during designated off-peak hours.
• Heat pump tariffs: Tailored to households using heat pumps, with rates intended to help manage heating costs.
• Battery tariffs: Designed for households with home batteries, allowing them to charge when electricity is cheaper and use stored energy later.
• Economy 7 and Economy 10: Traditional multi-rate tariffs that offer cheaper electricity during specific off-peak periods.
• Dynamic or agile tariffs: Rates change frequently, often in response to wholesale market prices.

Some suppliers also offer rewards for shifting electricity use during specific events. For example, Octopus Saving Sessions and E.ON Next PowerUp have offered incentives for reducing or adjusting usage when the grid is under pressure. Availability, eligibility and reward terms vary by supplier.

Do you need a smart meter?

Most smart time of use tariffs require a compatible smart meter. It records your electricity use in half-hourly intervals and sends readings to your supplier, allowing it to charge the correct rate for each period.

Economy 7 and Economy 10 have traditionally used specially configured meters, so check your meter's compatibility with your supplier before switching.

Having a smart meter does not mean you have to choose a time of use tariff. You can ask your supplier how your meter records and shares readings, and whether you can switch tariffs if your needs change.

A few things to know:

• Half-hourly readings: Check whether your meter is set to send readings every 30 minutes, as this may be required for your chosen tariff.
• Switching tariffs: You can generally switch tariffs or suppliers with a smart meter, although compatibility and meter configuration may affect your options.
• In-home display: This helps you monitor your electricity use, but it does not replace your regular energy bill. Your first bill after a meter installation may still contain estimated readings.

Read our guide to the pros and cons of smart meters before you decide.

Who can save money on a time of use tariff?

Time of use tariffs are most likely to save you money if you can shift some of your electricity use to cheaper periods. Whether one is right for you depends on your household, daily routine and ability to change when you use electricity.

You do not need specialist equipment to benefit. Simply moving some appliance use to cheaper periods may reduce your costs. However, check the standing charge, peak and off-peak rates, contract terms and any exit fees before switching.

The key is to compare the tariff against your actual electricity usage. A low off-peak rate alone does not guarantee savings if you end up paying more during the rest of the day.

How can you work out whether you would save?

The best way to compare tariffs is to use your own electricity consumption rather than relying on the headline off-peak rate.

Follow these steps:

1. Get your usage data. If you have a smart meter, check whether your supplier lets you download your half-hourly electricity readings.
2. Look at your usage patterns. Identify how much electricity you use during peak and off-peak periods.
3. Compare the costs. Use a comparison tool or supplier calculator that supports time of use tariffs, where available.
4. Include all charges. Compare standing charges, unit rates and any additional fees over a full year.

You can also estimate the proportion of electricity you would need to use off-peak for a time of use tariff to break even against a single-rate tariff.

(peak rate − single rate) ÷ (peak rate − off-peak rate)

For example, Ofgem's electricity price cap for 1 October to 31 December 2026 is 26.32p per kWh for a single-rate direct debit tariff. Suppose, for illustration, a time of use tariff charges 35p per kWh at peak times and 10p off-peak.

Using these example rates:

In this example, around 35% of your electricity would need to be used off-peak for the unit costs to break even, assuming the same standing charge on both tariffs.

These time of use rates are illustrative, not a real tariff. Use the actual rates offered by your supplier to estimate your own savings. If the standing charges differ, you will also need to account for that difference. The result is an estimate, so comparing your total annual costs is more reliable than looking at unit rates alone.

Does the energy price cap apply to time of use tariffs?

No, not in the same way as standard variable tariffs. Ofgem's energy price cap limits the unit rates and standing charges on standard variable tariffs, but time of use tariffs have different rates depending on when you use electricity. Dynamic tariffs can also change frequently in response to wholesale market prices.

For 1 October to 31 December 2026, the price cap for a standard single-rate electricity tariff paid by direct debit is 26.32p per kWh, with a standing charge of 54.83p per day. These figures are a useful benchmark, but your time of use tariff may have different peak and off-peak rates.

What should you check before choosing a time of use tariff?

Before switching, make sure you understand:

• Peak and off-peak hours: Check the exact times and whether they change by season or day of the week.
• How prices are set: Find out whether rates are fixed for each time period or change frequently.
• Equipment requirements: Check whether you need a compatible smart meter, electric vehicle charger, heat pump or battery.
• Contract terms: Look at the contract length, exit fees and any conditions for leaving the tariff.
• Usage tools: Find out whether the supplier provides an app or other tools to monitor your electricity consumption.
• Flexibility: Check whether you can switch to another tariff if your circumstances or energy needs change.

If you are unsure, compare the likely annual cost with your current tariff before making a decision.

What is an export tariff?

An export tariff pays you for surplus electricity you generate at home and send back to the grid. These tariffs are particularly relevant if you have solar panels or another eligible electricity-generating system.

In Great Britain, the Smart Export Guarantee (SEG) launched on 1 January 2020. Under the scheme, licensed electricity suppliers with at least 150,000 domestic electricity customers must offer an eligible export tariff. Smaller suppliers can choose to participate voluntarily.

The amount you receive depends on your supplier and the tariff you choose. Export payments are separate from the charges you pay to import electricity from the grid.

Who can get an export tariff?

Under the Smart Export Guarantee, eligible installations can include:

• Solar photovoltaic (PV) panels.
• Onshore wind systems.
• Hydro installations.
• Anaerobic digestion systems.
• Micro combined heat and power (micro-CHP) systems.

There are capacity limits and other eligibility conditions. You will also need an appropriate meter capable of measuring exported electricity, with the required export meter point administration number (MPAN).

SEG tariffs must pay more than zero pence per kWh for electricity exported. Suppliers decide their own rates, tariff structures and payment schedules, so compare the terms before signing up.

Your export tariff does not have to be with the same supplier that provides your electricity. This means you can compare export payments separately from the price you pay to import electricity.

What is the link between time of use and export tariffs?

A time of use tariff determines how much you pay for electricity you import from the grid, with rates varying depending on when you use it. An export tariff, on the other hand, pays you for surplus electricity you generate and send back to the grid.

You do not need both tariffs. You can have a time of use tariff without an export tariff, or receive export payments without being on a time of use tariff. However, if you have solar panels or another eligible electricity-generating system, combining them could help you manage your energy costs.

For example, your solar panels might generate more electricity than you need during the day. You could export the surplus to the grid and receive payments through an export tariff. Later, when your panels generate less electricity, you could import power from the grid during cheaper off-peak periods under a time of use tariff, where practical.

Whether this saves you money depends on how much electricity you generate and use, when you import or export it, and the rates you pay and receive. Comparing both tariffs can help you decide which combination works best for your household.

Suppliers offering time of use and export tariffs (checked 28 October 2026)

Tariff names, rules and rates change often, so check the supplier’s page before you choose. Some tariffs need a smart meter, an electric vehicle, a heat pump, a battery or solar panels.

Some export tariffs are only available with certain import tariffs or installations. For example, E.ON Next says Next Export Exclusive needs an E.ON Next import tariff and excludes time of use tariffs such as Next Drive. Check the supplier’s conditions before you apply.

Thinking about switching supplier? Compare energy deals with Switchcraft to explore your options and find a tariff that fits your household’s energy habits.

Frequently asked questions

Is a time of use tariff cheaper than a standard tariff? 

Only if enough of your electricity is used at the cheaper times. The break-even share depends on the peak, off-peak and standard rates.

Do I need a smart meter for a time of use tariff? 

For a smart tariff, yes. The Energy Saving Trust says you need a smart meter to sign up.

Can my supplier put me on a time of use tariff without asking? 

No. Smart Energy GB says that suppliers cannot charge you based on when you use your energy unless you specifically choose such a tariff.

Can I get an export tariff from a different supplier? 

Yes. Ofgem says that your SEG supplier does not need to be the same company that supplies your electricity.

Do dynamic tariffs ever pay you to use electricity? 

Sometimes. The Energy Saving Trust notes that Octopus Agile paid customers to use electricity for more than 200 hours in 2023.

Is the energy price cap the same as a time of use rate? 

No. The cap covers standard variable tariffs. Time of use rates are set by suppliers.