Is there a time-of-use tariff for heat pumps in the UK?

The headline numbers are worth stating plainly. Nesta modelled a time-of-use tariff for heat pumps saving customers £318, or 18% of annual energy bills⁴. Energy UK puts the air source heat pump saving with a time-of-use tariff at £260⁵, and Nesta reports heat pump owners could save up to £600 a year just by switching to one⁶. Off-peak rates on some tariffs run as low as 7p per kWh⁷.

What the tariff does not do is remove dependence. The heat pump still draws from the grid, still needs a supplier, and still needs a smart meter to be billed on time-of-use rates at all⁸. The saving depends on the household's heating pattern lining up with the cheap hours. Where it does not, official guidance is blunt: time-of-use tariffs can increase fuel bills⁹.

Yes, time-of-use tariffs for heat pumps exist in the UK

The existence question has a short answer and a longer one. The short answer is that heat pump tariffs are a live product category: some suppliers offer specific electricity tariffs designed to minimise heat pump running costs¹. The Energy Saving Trust frames the mechanism as a rate that changes by time of day, so the heat pump can run when electricity is cheaper². Parliament's briefing treats flexible tariffs as an additional savings route on top of the heat pump itself³.

The longer answer is about how thin the market still is. In Nesta's heat pump user survey, only 6% of respondents said they were currently on one of these time-of-use tariffs¹². That is a small share of a small installed base, and it explains why the tariffs are often described as emerging rather than standard. Nesta's own conclusion is that time-of-use tariffs are likely to be beneficial to many heat pump owners, and that policy should ensure they are available to as many households as possible through enabling actions such as the smart meter rollout and ongoing research into the end-user experience¹³.

For a household, the practical meaning is this: the tariff exists, it is not universal, and whether it is offered depends on the supplier and on the meter in the home. The independence gain is real but partial. A heat pump on a time-of-use tariff is still a grid-connected appliance on a supplier's terms; what changes is the household's ability to choose when it buys its electricity, and to pay less for the hours it can shift. That is a shift in control over timing, not a shift away from the grid.

How the three-level tariff structure works

The structure that gets called a heat pump time-of-use tariff is not a single shape. The Energy Saving Trust's integrated electric home case study describes one as a time of use tariff that offers three levels¹⁴. Three levels means three prices across the day: a cheap block, a mid-rate, and an expensive peak. The point of the middle level is that it gives the household somewhere to put load that cannot be moved into the cheapest hours.

Pricing models differ between suppliers. Which? reports two approaches: a set, cheaper rate per kWh regardless of where you live, or a discount compared with your region's standard tariff¹⁰. The first is simpler to compare; the second ties the saving to whatever the regional standard rate happens to be.

A dynamic time-of-use tariff works differently again. Ofgem's research describes it as offering a different price per unit of energy depending on the time of day, with the times and rates set in advance or published ahead¹⁵. That is the half-hourly end of the market, and it is where the price can move sharply.

The three-level design is the one most often marketed at heat pump owners because a heat pump cannot be switched on and off like a charger. It has thermal mass, and a well-insulated home holds heat for hours. That is what makes a mid-rate block useful: the household can pre-heat in the cheap window and coast through the peak.

Off-peak rates: 7p to 10p per kWh on some tariffs

The cheap rate is the whole point, and the published figures vary widely. One independent guide gives Octopus Go as an example, with off-peak rates as low as £0.07/kWh from 23:30 to 05:30⁷. That is an electric vehicle tariff rather than a heat pump one, but it shows the floor that off-peak pricing reaches in the UK market.

At the other end, official guidance for the Domestic RHI uses a set tariff rate of 10.92 pence per kWh as an example payment formula for an air source heat pump with one heat meter and one electricity meter¹⁶. That is a scheme rate rather than a retail tariff, but it sits in the same band and shows where official figures place heat pump electricity.

For comparison, Economy 7 tariffs are assumed at 34.38p for on-peak and 15.43p for off-peak, with a 58:42 split¹⁷. The gap between 7p and 15.43p is the difference between a purpose-built flexible tariff and a legacy restricted-meter one.

The peak rate matters as much as the cheap one. Which? reports that some heat pump tariffs come with a pricier peak rate between 4pm and 7pm, and that peak rates have been seen up to as much as 50% pricier than standard tariff rates¹⁰. A household that heats hardest in that window can lose more than it gains.

What you can save: around £318 a year, or 18%

The savings estimates in circulation do not agree, and the disagreement is worth setting out rather than smoothing over. Nesta modelled a time-of-use tariff for heat pumps saving customers £318, or 18% of annual energy bills⁴. Energy UK's figure for an air source heat pump with a time-of-use tariff is £260⁵. Nesta separately reports that heat pump owners could save up to £600 per year just by switching to a time-of-use tariff⁶. The Energy Saving Trust says switching to a heat pump appropriate tariff can save up to £330 a year on heating bills¹⁸.

The spread comes from what each estimate assumes. The £318 figure is modelled against annual energy bills as a whole⁴. The £260 figure is an air source heat pump line in a table⁵. The £600 figure is a maximum across heat pump owners rather than a typical case⁶. None of them is a quote, and none is net of the heat pump's full running cost.

Where a household adds solar and a battery, the numbers move again. Energy UK reports that a combination of a heat pump, solar and a battery can save households £810 more per year when operated flexibly than the same assets on a single-rate tariff⁵. Ofgem's draft impact assessment states that households with heat pumps could save more than £250 annually by shifting to a smart tariff and using their heat pump flexibly¹⁹.

The direction of travel is consistent even where the amounts differ: flexible operation pays, and the more controllable electrical load a home has, the more it pays. The dependence that remains is on the tariff staying available and on the household's willingness to run heating on the supplier's clock rather than its own.

Good Energy's heat pump tariff: around 12 months in duration

Fixed energy tariffs usually run for 12 months, but can be as long as three years, according to Uswitch¹¹. Ofgem's research into consumer tariff choices tested 12-month fixed term, 24-month fixed term and standard variable options¹⁵. A heat pump tariff is normally built on a fixed term of that kind, which means the cheap rates are guaranteed only for the term.

That term length is the household's main exposure. When a 12-month term ends, the time-of-use rates that made the heat pump cheap to run stop applying unless a new deal is agreed, and the household typically falls to the supplier's standard variable tariff. The saving modelled at £318 a year⁴ is a saving for the duration of the tariff, not a permanent change to the cost of heating.

There is a second timing risk inside the term. Energy Saving Trust guidance on running a heat pump efficiently says to make sure the heat pump is not trying to heat hot water or the house overnight when outside air temperatures are significantly lower, unless on a time of use tariff²⁰. The exception is doing real work: on a time-of-use tariff, overnight running is the cheap window, and the lower outdoor temperature is the trade the household accepts for the lower rate.

For a household weighing independence, the term length is the honest limit. A heat pump tariff buys a period of cheaper electricity in exchange for accepting the supplier's schedule, and it renews on the supplier's terms. It does not lock in a price for the life of the heat pump.

Whether a time-of-use tariff suits your household

Suitability turns on three things: whether the home has flexible electrical load, whether the heating pattern can be moved, and whether the meter supports the tariff.

On load, the National Energy Action guidance is that for households with heat pumps, electric hot water systems or solar technologies, these tariffs can offer meaningful savings²¹. The Energy Saving Trust's advice for a heat pump on its own is to look for a dynamic tariff or a heat pump tariff²². Where a home has a heat pump, solar panels and a battery, the guidance is that it will probably do best with a heat pump tariff that includes a peak rate, using the battery to power the heat pump during expensive periods²².

On heating pattern, the risk is real. Official guidance states that where heating patterns are not well aligned to the tariff, time-of-use tariffs can increase fuel bills⁹. Energy Saving Trust research on tariff types found some tariff types might actually increase energy bills²³. Home Energy Scotland's rule of thumb is that heat pumps work well with single-rate tariffs, that Economy 7 rates do not always fit well with heat pump usage, and that heat pump tariffs usually need a smart meter²⁴.

On the meter, the requirement is firm. Citizens Advice states that a smart meter is needed to get a heat pump or EV tariff⁸. MCS Certified guidance adds that allowing heating to run at times when electricity is cheaper through time of use tariffs and the demand flexibility service is part of how a heat pump is run well²⁵.

The independence picture is mixed by design. A household on a heat pump time-of-use tariff gains control over when it buys power and can cut its bill by shifting load, but it remains dependent on the grid, on a supplier offering the tariff, on a smart meter communicating properly, and on a fixed term that will end. The tariff is a tool for cheaper operation, not a route off the network.