Nesta published research on 19 November 2024 finding that households with heat pumps could save up to £650 a year on the average annual electricity bill by switching from a fixed heat pump tariff to a time-of-use tariff and flexing heat demand1. The modelling was carried out by energy consultancy Cornwall Insight, which Nesta commissioned to test the financial returns of heat pump flexibility2.
The £650 figure sits within a wider modelled range. Cornwall Insight found average savings of £640 to £750 a year from operating a heat pump flexibly on a time-of-use tariff, compared with a single-rate tariff where the heat pump runs on a standard profile2. Within that range, fixed-rate time-of-use tariffs delivered savings of £650 a year, while the less predictable pass-through tariff delivered £7502. The report states that under the modelled pass-through tariff, a heat pump used flexibly would save an average of £750 a year compared with a consumer on a single rate tariff operating a standard heat pump profile, reflecting the higher prices of the single rate tariff under the hedging and risk approach used2.
The same research found that flexing a heat pump on a single rate tariff costs more, not less: an additional £46 a year on average across the ten-year modelled period, because pre-heating raises electricity consumption without any price incentive2. Adding solar and storage changes the picture. A flexible heat pump alongside solar PV and battery storage produced average savings of £810 a year, but where solar and storage responded to price signals and the heat pump did not, savings reached more than £1,000 a year on average2. Under the pass-through tariff, adding solar PV produced an average annual saving of £483 when used flexibly alongside the heat pump, and adding battery storage alongside the solar PV produced a saving of £7732.
A separate Nesta trial, HeatFlex, tested remote control of heat pumps. Half of the 43 volunteer homeowners recruited had their heat pumps remotely controlled for four-hour periods, with a two-hour preheating period followed by a two-hour flexibility window1. Nesta ran 30 events from February 2024 to April 2024, typically between 16:00 and 20:00 on weekday evenings1. The trial recorded an average 74% reduction in typical heat pump electricity consumption, or 0.382 kWh per half-hour across a two-hour window, and an average 32% reduction in typical household electricity consumption, or 0.123 kWh per half-hour1. Nesta notes the household figure is lower partly because many participants have solar panels and batteries1.
The average internal temperature in participating homes rose by 0.85C during preheating and was still on average 0.16C higher at the end of the second two-hour period than at the start of preheating1. Of participants surveyed afterwards, 81% said they were either "Satisfied" or "Very satisfied" with the temperature in their home, and only 9% opted out, typically because they were not going to be at home1.
"The modelling finds households can make savings of up to £650 a year on the average annual electricity bill, when switching from a fixed heat pump tariff to a time-of-use tariff and flexing heat demand."
A later Nesta blog, published 17 February 2025, describes the same Cornwall Insight work differently, saying it "saved heat pump users up to £600 per year" compared to a standard tariff, and adds that even without flexing, being on a time-of-use tariff saved money3. The blog also notes that Cornwall's analysis only covers the next 10 years, and that it compared smart tariffs with the Ofgem price cap, which sets the maximum that standard tariffs can charge3.
Why it matters for households
For a home with a heat pump, the tariff the heat pump runs on shapes running costs as much as the heat pump itself. The modelling indicates that the largest single lever is the tariff structure rather than the automation: moving from a single-rate tariff to a time-of-use tariff accounts for most of the modelled saving, with flexing adding a smaller amount on top2. The pass-through tariff saves £84 a year using a heat pump flexibly compared to not flexing on the same tariff, and the tri-rate tariff saves £822.
The trial evidence suggests that remote control of a heat pump can cut electricity use during peak windows without a large comfort penalty, which matters for a household's energy independence because it reduces exposure to the most expensive hours of the day1. Nesta's blog notes that off-peak periods tend to last longer than peak periods each day, so a heat pump normally uses most of its electricity in cheaper periods3. It also flags risks around exposing households, particularly low-income and vulnerable households, to greatly fluctuating electricity prices, and questions over whether the benefits of smart tariffs can be made available to everyone3.
What happens next
Nesta states it will continue to explore the potential role of smart tariffs in reducing heat pump running costs in future work2. Its blog says Nesta has begun an exploratory project to test consumer sentiment around increasing tariff takeup3. No further dated commitments are given in the published material.