Ofgem is requiring energy suppliers to be able to offer Time of Use tariffs by 2025, the regulator said in a document published on 4 September 2021 setting out its priorities for the transition to electric vehicles1.
The commitment appears twice in the document, in the executive summary and in the section on system integration, in identical wording: "We are also requiring suppliers to be able to offer Time of Use tariffs by 2025."1 The document does not set out the detailed design of those tariffs, nor which suppliers must offer them, nor what happens if a supplier does not.
"We are also requiring suppliers to be able to offer Time of Use tariffs by 2025."
The same document sets out why shifting when electric vehicles charge matters to the electricity system. It says that without smart charging, by 2050 EVs could push peak demand up by more than around 20GW, which it describes as 35% of current peak demand, while models suggest smart charging alone could avoid 5 to 15GW of that demand1. It also states that electric cars and vans are expected to need 65 to 100TWh of electricity annually by 2050, an increase of 20 to 30% over today's levels, and that there may be 14 million EVs on UK roads by 20301.
The document places the tariff requirement alongside other measures. Ofgem said it announced in April 2021 its decision to pursue an industry-led implementation of market-wide half-hourly settlement, and that in August 2021 it published decisions on the governance framework and the obligations that should be placed on parties1. It also refers to government plans to lay legislation to mandate that all new private home and workplace charge points under 50kW have smart functionality1.
The document does not give a date within 2025, a definition of what counts as being able to offer such a tariff, or any figure for how many households are expected to take one up. Those details have not been reported in the document.
Why it matters for households
A Time of Use tariff prices electricity differently depending on when it is used, so the cost of running appliances, charging a car or charging a home battery depends on the hour. The requirement means suppliers should have such a tariff available, rather than households having to seek out a specialist provider.
Using one depends on being able to shift load away from expensive periods, which in practice rests on smart meters recording when electricity is used and, increasingly, on half-hourly settlement so that suppliers can bill on that basis. Ofgem's own figures in the same document suggest the system-wide gain comes from charging sitting in off-peak hours1.
For a household, the practical effect is that the price of a unit of electricity becomes a choice about timing rather than a single flat rate, and the value of that choice depends on the appliances and vehicles in the home. The tariff rules that govern what suppliers must offer sit within Ofgem's wider regulation of the retail market.
What happens next
The document states that a joint BEIS/Ofgem EV Flexibility Policy Statement will be published in 2022, and that the electricity distribution price controls covering investment in local grids for the five-year period to 2028 will be confirmed in 20221. No further milestone for the Time of Use tariff requirement itself is given beyond 2025.