Smart tariffs and Time of use tariffs are being rolled out by suppliers to homes with a Smart Meter. Over 240,000 smart meters have been installed across Ireland by ESB Networks with every home due to have a new Smart Meter by 2024. Pinergy has significant experience in Smart Meters having pioneered this technology over the last six years.
First things first – How is electricity priced?
Electricity pricing is made up of a Unit Rate and Standing Charges. The Standing Charges are a fixed amount, which means you can’t influence how much you pay. This is a cost of having electricity supplied to your home, farm or business. They are generally made up of costs of generating, distributing and supplying electricity.
The unit rate is a variable element which means it goes up or down depending on how much electricity that you use. If you use less than you pay less, if you use more than you pay more.
How can I reduce my spend on Electricity?
The way to reduce your energy spend is to optimise your consumption. Make sure you are using the right amount of electricity for your property. Compare how much you use to homes just like yours.
Typically, a home will use 4,200 kWh in a year. Some will use more, some will use less. However, the key to understanding your consumption is the number of kWh.
This is not easy because most suppliers provide your consumption data as a single number over a month or even two months in a dull looking Bill. What you need to understand is how many kWh you use everyday, so you can make a change tomorrow.
The unit rate multiplied by your number of kWh in a day is how much you use every day. Don’t forget to include the Standing Charges!
What is a Time of Use Tariff or Smart Tariff?
Traditionally, Electricity has been priced as either a single unit rate for 24 hours or a Day / Night rate which meant you had one price from 8am to 8pm (daytime) and a different price from 8pm to 8am (night-time). The Day / Night rate was introduced to help homes that used Storage heaters overnight to gather heat for the daytime back in the 1980s. Not much innovation since then!
Now, with a Smart Meter you can access Time of Use tariffs which mean you can get a different unit rate for different times of the day. Thus, you have more choice than a 24 Hour Meter or a Day / Night Meter.
In fact, your supplier can price electricity every 30 minutes over the 24 hours of a day.
So, for example, you could get a discounted unit rate of X from 6pm to 10pm and a standard unit rate of Y for the remaining 20 hours of a day. This should encourage you to use more or most of your electricity between 6pm and 10pm to avail of lower cost electricity for cooking, heating or using appliances like washing machines or dishwashers.
The purpose of Time of Use or Smart tariffs is to encourage responsible use of electricity. Electricity is a resource and not a commodity and energy waste is a big problem. To encourage the right behaviours, suppliers will be able to give discounts at time of day when demand is lower to help better manage the national grid.
So perhaps charging your Electric Vehicle overnight makes sense as demand for electricity is much lower overnight and you might need a lot of electricity to charge your Car.
Time of Use tariffs have been available in many other countries and will become more common in Ireland with the rollout and the switching on of ESB Networks Smart Meters. Pinergy has been providing its customers with Smart Meters for many years so we have a lot of experience in how they can really help you to optimize your energy.
What do we hope to achieve with these new tariffs?
As a country we are going to use more and more electricity over the coming years. Whilst our homes are becoming more energy efficient, there are a number of a number of factors that are going to mean demand will actually increase.
As we migrate our cars to Electric Vehicles over the next decade and reduce the need for fossil fuels to heat our homes and business, demand for electricity will increase as it steps in for petrol, diesel, gas, coal & oil.
So, we need to make sure that we encourage the right behaviours which is the reason these Tariffs are being rolled out.
We are likely to see the following changes driven by Time of Use Tariffs over the next few years;
- Conscious consumption means that more people become more aware of how, why and when they use electricity to ultimately reduce energy waste.
- Consumers getting rewarded for using electricity at times when demand is low. In the UK we are seeing suppliers pay their customers small amounts to charge their electric vehicles overnight when demand is at it lowest!
- Support the generation of even more renewable energy. As we move, as a country, to more renewable energy we will see the rollout of Time of Use tariffs enabling the development of more renewable generation which will be good for both customers pockets and the planet.
If you would like any more information just contact us.