By Ollie Cooper, Money team
We’ve all heard consumer advice that’s repeated so often it almost becomes cliché. So, every Friday the Money team will get to the bottom of a different “fact” and decide whether it’s a myth or must.
This week’s is…
‘Electricity is cheaper overnight’
Many of us are happy making small changes to shave off pennies from our energy bills – so how much, if any, attention should we pay to the time we use our electrical appliances?
For this one, we’ve enlisted the help of Roy Bedlow, chief executive and Founder of Low Carbon and Trust Power.
“Electricity’s cost and environmental impact change throughout the day, influenced by demand and the sources generating it,” Roy says.
Peak hours, typically early morning and evening, see increased demand – leading to higher costs.
Prices can reach up to 13p per kWh, and, on extreme days, can soar as high as £1.95/kWh at 6pm (as we saw on 3 July last year).
“At night, when demand drops, prices can fall to around 6.9p per kWh, showcasing the fluctuating nature of wholesale electricity costs,” Roy says.
So we should use the washing machine late at night?
Not exactly.
These days, most households are on standard variable tariffs and pay the same for each unit of electricity – a rate set by the energy price cap – so not everyone can benefit from lower prices later at night.
However, some tariffs, like Octopus Tracker and Agile Tracker, adjust prices daily or every 30 minutes in line with wholesale prices.
“These tariffs are not covered by the price cap, so while they offer potential savings during low-price periods, they also expose consumers to higher costs during price spikes,” Roy says.
If you want capitalise more from lower cost, off-peak power, consider a Time of Use tariff – which incentivises off-peak use by offering periods with lower rates.
“Households with predictable energy use patterns, such as charging electric vehicles overnight, can benefit significantly from these tariffs,” Roy says.
The aim is to shift at least 40% of energy usage to off-peak times for savings as unit costs will be higher than the price cap rate at other times.
An example…
Let’s say you own an electric vehicle – and you’re on a Time of Use tariff for your energy bill.
You drive your car around 10,000 miles a year, which Roy estimates would require 3070kWh to charge over those 12 months.
Should you only use off-peak hours to do so (a rate of around 7.5p/kWh at the time of writing), it’ll cost around £230.25 to charge your vehicle for the year.
Try charging at peak times and that amount jumps to £864.82 – a £634.57 increase.
Two-for-one
As that example demonstrates – you can make some pretty significant savings if you make the most of the system’s current format.
It’s not just potentially good for the wallet, but the environment too.
“The carbon intensity of electricity, measured in grams of CO2 per kilowatt-hour, peaks during these high-demand periods, especially around 6.30pm, with the highest average grid carbon intensity,” Roy says.
“Conversely, it’s lower around noon, demonstrating the environmental benefits of using electricity during off-peak times.”
So, myth or must?
Quite simply, electricity varies in cost (and environmental impact) depending on when it’s used.
Understanding and adapting to these variations can lead to financial savings and reduced environmental impact.
This one’s a money must.