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Chart of the Week

2020

Takes time to make time: When will we have time-of-use tariffs?

Oliver Archer Analyst

Time-of-use (ToU) tariffs could be a key tool in supporting system decarbonisation and ensuring consumers see the benefits of the energy transition. Research for our latest edition of the Connected Homes Insight Service has found suppliers and consumers both taking tentative steps in exploring ToU pricing, with ambitious innovation and uptake held back by slow industry processes and understandable consumer caution. In this week's 'Chart of the week, we look at projected uptake of ToU tariffs across the Electricity System Operator’s (ESO) 2020 Future Energy Scenarios (FES), and consider the changes we will need to see in the industry to facilitate a wider shift to time of use pricing. There are currently eight tariffs on the market with more than one rate throughout the day, not including traditional economy 7 style metering arrangements. Of these, only Octopus Energy’s Agile tariff offers more than two rates, after Bulb updated its smart tariff trial and Green Energy UK temporarily retracted its three-rate TIDE tariff. While adoption of these tariffs is anecdotally low at the moment, the ESO’s FES 2020 report models a significant increase in uptake, with ToU offerings becoming more popular than single-rate tariffs over the coming decades (Figure 1). Across all four FES scenarios, households take up ToU tariffs following the expected growth in EV ownership, with the most ambitious scenario – Leading the Way – seeing 50% of households using ToU tariffs by 2032, and 83% by 2050. The assumption that ToU uptake will follow EV adoption is a credible one. ...

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