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This guide is all about the different kinds of electricity tariffs available. It will give you an overview of how they work, how they differ and how Homely can help you make savings.
Variable tariffs – unit cost changes over weeks and months
This is typically the tariff you would be on if you do nothing. The unit prices you’ll pay will change from time to time, mainly driven by the prices in the wholesale electricity market rising and falling, but irrespective of the time of day, the unit cost is the same. Typically your supplier will notify you if they are going to change the prices, usually giving several weeks’ notice. Variable tariffs don’t provide the reassurance of a fixed rate but they also don’t have any associated exit fees.
Fixed tariffs – unit costs locked in for a set period
These tariffs typically offer a fixed unit cost for one or two years. Again, you’ll pay the same unit cost irrespective of the time of day the energy is used. You’ll also pay an exit fee if you want to switch to another deal before the fixed period is up. Fixed tariffs often appeal to those looking for some certainty around their bills for the foreseeable future. However, if the wholesale market price drops your fixed rate might be more expensive than the variable one, and vice versa.
Smart tariffs – unit costs vary during each day
Smart tariffs (AKA Dynamic tariffs or Time of Use tariffs) work differently as you will not only pay a variable unit cost, it will vary up to 48 times each day. There will likely be an upper unit price cap and, in rare circumstances, you can actually be paid for using energy. The energy supplier will release a schedule of these different costs the day before. This creates an opportunity to make savings if you can operate your heat pump at the cheapest times and avoid the most expensive.
Tariffs and Homely
You can use Homely on any tariff. However, to optimise your savings potential we recommend selecting a Smart tariff, such as Octopus Go. That’s because Homely can then take everything it knows and has learnt, and combine that with the daily schedule of unit costs to come up with an optimised heating schedule. You’ll need to have Homely in Smart+ mode to take advantage of that. It’s a subscription service, free in the first year and £25 per annum after that.
Homely can also reduce your heating bills if you are on a Fixed tariff. It does so by factoring in what it has learnt about how your home heats up and cools down, and then layers the local weather forecast over that. This means that you get the cosy home you want without using more energy than required. You’ll need to have Homely in Smart mode for this. Smart mode is included with no charge.
This guide will walk you through everything you need to know about how your hot water is managed in each of the three available Homely modes: Standard; Smart; and Smart+.
Hot water in Standard mode
This most closely replicates how a standard thermostat would work. You tell Homely when you would like your water to start and stop heating. There is no pre-heating so if you have asked for it to come on at 7am, that is when it will start heating up. It can take some time for a large amount of water (e.g. enough for a couple of showers) to warm up so it’s best to set the start for at least 60 minutes before you’ll need it.
Modern tanks can keep water hot for longer periods so there should be enough for handwashing and rinsing of dishes outside of the set times. If there is an unplanned need for extra hot water then you can use Homely’s boost feature.
If your household likes to hit the shower in the evening then we would suggest setting another hour of water heating prior to that.
You can change your settings at any time so you’ll quickly find what works for you.
Hot water in Smart mode – pre-heating included
Tell us when you would like to have larger amounts of hot water available (e.g. for baths and showers). Homely will pre-heat your water for that period. So, if you set your hot water for 7am, Homely will start heating it up before then to ensure there is plenty ready at that time.
Again, modern tanks can keep water hot for longer periods so there should be enough for handwashing and rinsing of dishes outside of the set times and the boost function is always available.
The key difference between Standard and Smart is the pre-heating.
Hot water in Smart+ mode – pre-heating and cost savings
In Smart+ mode, Homely will seek to pre-heat your water at the cheapest possible times. It can do that because Smart+ mode is optimised to work with Smart tariffs, where the unit cost of electricity fluctuates every 30 minutes during the 24hr period.
Even if Homely has found a cheap slot sometime before you need the hot water, your tank should do a decent job of maintaining the heat. If you need extra, perhaps for guests, then you can give it a boost. Obviously, if you activate the boost during a peak charging period then that will impact your energy bill.
Smart+ is the tariff optimisation service from Homely. It’s a subscription service but the annual fee (£25) is waived for the first year. Smart+ users can typically achieve savings of around 18% on their heating bills (compared with those not using Smart+).
Homely has you covered
Whichever mode you are in, Homely has your hot water covered. However, we would recommend Smart and Smart+ modes for the pre-heating benefit and, if you are on a Smart tariff and looking to optimise your savings, then why not try Smart+. Remember, it’s free for the first year.