None of the tariffs available today are likely to last long...
... their lifetime will be far less than that of the storage battery and the heat-pump you are installing now.

As we move towards de-carbonisation of the the grid by 2030, and Net Zero (CO2 emissions) by 2050,
tariffs will need to reflect the changes to the energy-mix which contribute to the electricity supplies in your area.

Octopus have been pretty adventurous in championing a wide array of Time of Use (ToU) tariffs.
Some have been successful, whilst others have required modifying in light of analysis they do on customer consumption.

The most important aspect of Octopus' ToU tariff range is that they have gained data on which they can construct mathematical modelling.
Their most valuable asset is that model because it lowers the risk of them releasing a new tariff which loses them money.

That's a serious concern for most Energy Suppliers.
They will have taken note of the energy crisis in 2022, when eighteen UK Suppliers collapsed.

Ofgem are currently consulting on a possible Directive that Suppliers should offer a tariff with no Daily Standing Charge.
To achieve that, they also ask us to consider the implementation of a Block Tariff.

What I found interesting is that the financial modelling presented by Ofgem is mainly based on the risks to Suppliers.
But, as the Industry Regulator, Ofgem's principle objective is to protect the interests of consumers. 🤔 

If you want to learn more of possible future tariff structures then I can present further information here.

But please don't use existing or new tariffs as the basis of deciding the viability of adding a particular storage battery.
Within a year, those calculations will be looking very dated!

Posted by: @broadsman

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Octopus might be about to introduce a special Heat Pump tariff so that they can be run at the Cosy cheap rates 24/7

I wonder how that will work?  You should /may have an MCS certificate to prove that you have a heat pump but how will the energy used by the HP be metered separately?  The only way I can think is if Octo allows you N kWh / per day at a lower rate and then the balance at a higher rate?

If so and you use more than the allotted amount you could still benefit from a battery provided of course there is a lower overnight tariff.

Posted by: @transparent

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If you want to learn more of possible future tariff structures then I can present further information here.

But please don't use existing or new tariffs as the basis of deciding the viability of adding a particular storage battery.
Within a year, those calculations will be looking very dated!

I for one would be interested in what you think future tariff structures might be like.

It is highly likely that Octopus' engineers have been contributing to the development of remote controls for heat-pumps as part of a DESNZ Programme.

This is based on the Public Consultation in April/May'24 on the implementation of Demand Side Response.
I was a participant.

The consultation guidance documents can still be viewed and downloaded.
Control of Energy Smart Appliances (ESAs) is in Part-1.

DESNZ's strategy is founded on the belief that Britain will experience periods when electricity Demand will outstrip Supply.
They produced no data or other evidence to support that assertion.

Nevertheless, they have continued to work on an opt-in system which allows 3rd-parties to switch off domestic heat pumps during times of high demand.

It's likely that Octopus want to glean data on consumer use of heat-pumps.
That will allow them to evaluate at a later date whether they wish to apply for a licence to access the Government database and control heat pumps remotely.

Posted by: @downfield

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you could still benefit from a battery provided of course there is a lower overnight tariff

There are always likely to be cheaper-rate periods during any 24hrs,
but the overnight tariffs will surely disappear.

The present 'cheap rate' Economy-7 style tariffs are a legacy from the days when we generated electricity from fossil fuels.

To keep the turbines running in 'combined cycle' mode, there needs to be a minimum load for Gas Turbine sites, for example.

In future, there will be two significant changes:

• the overnight period will use generation from wind-turbines, hydro-electric, battery storage, nuclear and interconnectors
• greater ownership of EV's will increase night-time demand

Posted by: @irmartini

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I for one would be interested in what you think future tariff structures might be like.

 

Im sure that someone who can predict this could earn a lot more money doing other things, like predicting the results of horse races.

Seriously though, ToU tarifs and local battery storage (whether dedicated on in the form of cars) are tools that have the potential significantly to reduce the peak demand on the grid, and as importantly the local electricity distribution network.  The extra capacity needed as a result of electrification of heating and transport is massive, and the cost of the infrastructure needed to transport it equally so.  The three possible approaches are

• build build build
• compulsory switch offs
• incentivisation by tariffing

I am sure @transparent will tell us about the current industry plans, but realistically Id bet it will be a combination of the three.

@downfield There is already a tariff for EV's which allows you to charge batteries as well, so maybe they will not worry what you are using as well as the heat pump. At least,I hope so. Thanks also to Transparent for his intuitive and knowledgeable observations.

Posted by: @downfield

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Posted by: @broadsman

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Octopus might be about to introduce a special Heat Pump tariff so that they can be run at the Cosy cheap rates 24/7

I wonder how that will work?  You should /may have an MCS certificate to prove that you have a heat pump but how will the energy used by the HP be metered separately?  The only way I can think is if Octo allows you N kWh / per day at a lower rate and then the balance at a higher rate?

If so and you use more than the allotted amount you could still benefit from a battery provided of course there is a lower overnight tariff.

 

OVO already offer such a rate.  Only for certain makes of heat pump.  They get the data from the heat pump via its internet interface and the manufacturer.  Obviously they have decided the accuracy is good enough.

Posted by: @irmartini

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I for one would be interested in what you think future tariff structures might be like

The problem with current tariff proposals is that they are being created without consideration of the grid.
Even Ofgem makes this mistake.

If the cost per kWh is less at certain times of the day, then consumers are going to switch more of their consumption to those periods.
Households who are more likely to take advantage are those with pre-payment meters and/or in energy poverty.

National Grid and the DNOs must ensure that the infrastructure is capable of delivering electricity during times of peak demand.
Only the maxima are of interest to them.
Thus their principle concern is the Early-Evening Peak:

However, the DNOs have no say in creating tariffs, which are the principle tool to flatten demand peaks.

And the Energy Suppliers haven't been offering ToU Tariffs to those with pre-payment meters.
Many are paying off debt, and they can't move Suppliers until the debt is cleared.
Suppliers are therefore lacking any incentive to use pre-payment meter households as method to tackle peak-flattening.

In the current Ofgem consultation on Tariffs with Zero Standing Charge, they too completely overlook the effect that tariffs have on the grid.

Not only is the grid ignored when asking us for feedback on different price points,
but also when they suggest the use of block tariffs.

In my responses I have therefore chosen to submit additional information in a document which illustrates the issue.

The following Timeline shows the effect of a Time-of-Use Tariff on a typical household where no one is at home during the day.
The 'base price' is illustrated at 20p/kWh, with rises and falls around that.

You can see the heating switch on just before dawn, the kettle at 6:50, followed by breakfast.

If there was no higher-price band between 17:00 - 20:30, then household consumption would follow the solid purple line
as the children come home from school, the evening meal gets cooked and the TV is on.

But the price rise to 23p/kWh has the effect of shifting the demand-peak by having the meal cooked before 5 o'clock and keeping it warm.

A daily block tariff has a similar effect but for a different reason.

We'll assume here that a Rising Block Tariff (shaded red) is being applied on top of the ToU Tariff.

The Block Tariff here imposes an extra 5p/kWh between 16:00 - 21:30 if total household consumption within that period exceeds 10kWh.

Households with low electricity use remain unaffected.
They will pay the rates dictated by the ToU Tariff as before.

But households who are more wasteful in their energy use will find themselves paying up to 28p/kWh if they exceed the 10kWh threshold.

To avoid that penalty, energy conservation measures are available:

• time appliances to switch on overnight (dishwasher and tumble-drier are good candidates)
• switch off lights when you leave the room
• don't re-charge smartphones and laptops during the block tariff period

It all comes down to basic common-sense.

Ofgem's Consultation proposes wider implementations of these principles.

Instead of opting for the daily block tariff which was assumed by the Smart Meter Designers,
they are consulting on block tariffs which might apply to consumption over a week, a month or an entire year.

Those options may well reduce overall consumption, but they will have no effect on the daily Demand Peak,
and it's that which is the main driver behind our massively expensive grid upgrades.