Being on the right energy tariff can have a huge impact on your energy bills. In order to point you to the right tariff, understanding the different types of energy tariffs out there is the first step.
In this blog we will explore the different types of energy tariffs available, and which energy tariffs are most suitable for solar PV systems, electric cars and battery storage owners! We hope it will come in handy finding the best tariffs for your solar panel installation!
What is an Energy Tariff?
An energy tariff is how your energy provider charges you for your energy usage. It can include both your gas and electricity. The main two types of energy tariffs are fixed rate and variable. The other listed tariffs are variations of the two, with different perks.
Fixed Rate Tariffs
A fixed rate tariff guarantees you a fixed unit rate of energy set for a period of time. Usually 12 to 18 months. After this period you are free to find another energy provider, and the average cost of unit rate of energy may have changed.
Fixed rate tariffs are designed to protect you from energy price rises, securing you in at a good rate and providing you with peace of mind. When your fixed rate tariff comes to an end you will be automatically put onto your providers default variable tariff.
Unlike a fixed rate tariff, in a variable tariff the price per kWh of energy can go up or down according to the market value. Variable tariffs offer the customer more of an unknown, and can cause a problem if there is a spike in the energy market. There is however a price cap that is set by the UK’s energy regulator Ofgem which sets a limit on how much energy suppliers can charge you. With a variable tariff you can also reap the rewards if the energy prices go down at any point.
Dual Fuel Tariffs
A dual fuel tariff is an energy tariff that simply covers both your gas and electricity bills under one supplier. In comparison to having two single fuel tariffs, a dual tariffs means that all your energy costs are under one bill for convenience.
Time of Use Tariffs / Economy 7 and Economy 10 Tariffs
Economy 7 and Economy 10 Tariffs are designed to give you a cheaper “off peak” rate of energy and a more expensive rate during peak hours. The key difference between the Economy 7 and 10 tariff is in the number of off-peak hours you get. In an Economy 7 Tariff you receive a 7-hour period from midnight to 7am at an off-peak rate and the more expensive rate covers the rest of the day. Whereas an Economy 10 tariff spreads its 10 cheapest hours throughout the day and night at set times. For example, you may get 5 off-peak hours during the night and a three-hour and two-hour off-peak period during the day. In order to sign up to an Economy tariff you will need a special meter fitted to monitor rate variation.
These “time of use” tariffs are perfect if you can shift your use of energy to off-peak hours. Money Saving Expert advises only making the change to an economy 7 tariff if you use around 40% of your electricity at night. Nevertheless, used properly there are lots of savings involved.
Prepaid energy tariffs are the energy equivalent of a pay-as-you-go phone. They tend to be slightly more expensive than standard or fixed-rate tariffs, however giving the customer total control of what they are using and spending on their energy. In order to be on a prepaid energy tariff you need a prepaid meter installed in your home. This allows the customer to pay in advance for their gas and electricity and top up their meter as they go.
Prepaid energy tariffs are available with either variable or fixed pricing plans for single or dual-fuel customers, however tariff options tend to be more limited. It is also worth mentioning that you cannot leave the tariff if you are in debt on your meter.
Online Energy Tariffs
Online energy tariffs are considered the cheapest tariff possible. As your energy bill is managed 100% online, requiring no paper or postage, the energy supplier offers you a discount, making online or “paperless” tariffs a great eco-friendly options as well. So if you prefer filing your paper bills an online tariff may not be for you.
Online energy tariffs may be offered on both variable and fixed tariff plans, for both single or dual-fuel customers. As part of your tariff you will be required to submit meter readings online.
Green Energy Tariffs
Unlike the other tariffs, in an export tariff the energy provider pays you for selling any surplus electricity back to them. Once referred to as the Feed-In-Tariff but now known as the Smart Export Guarantee Tariff, Export Tariffs allow home owners to make money from their generated energy. This is known as an outgoing tariff. You can choose one incoming and one outgoing tariff in total and they can be from different providers.