Research by Changeworks has found that consumers would only switch to a dynamic time of use (ToU) tariff if it saved them money, with many seeing the transition to such a tariff as “a lot of effort for little gain”.
Time-variant tariffs, which encourage consumers to use electricity at times of the day when grid demand is lower, or when generation from renewable sources of energy is higher, have been entering the market and are predicted to become one of the main energy supply models in the future.
However, at present only one supplier in the UK offers such a tariff.
With research showing that financial savings by switching to a ToU traffic to be minimal, attracting households to make the switch could be challenging. It was also found that low awareness and challenges with budgeting are just some of the barriers that could prevent householders from switching to a dynamic time of use tariff .
A vulnerable consumer who took part in the research said: “I would much prefer the certainty of my energy outgoings rather than the stress of a potential large bill.”
The research also found:
- Consumers were worried about the loss of flexibility to their daily routines.
- Those less able to change their energy consumption patterns, such as those suffering ill health or with young children at home, could be limited in their ability to benefit from the tariff.
- Communities living in the Scottish Highlands and Islands already face several barriers when it comes to energy consumption, such as higher prices, poor connectivity and delays in the smart meter rollout which is essential for dynamic ToU tariffs.
- Participants viewed the tariff as “unjust”, favouring wealthier consumers who could invest in storage technologies.
- Awareness of these tariffs is low and concentrated to ‘deep-green’ consumers who are already interested in lowering their carbon impact.
Commenting on the research, Megan Lancaster, a Researcher at Changeworks, said: “The ways in which we consume electricity are changing. Dynamic ToU tariffs provide a more flexible electricity grid, but our research shows that they risk creating inequalities to consumers, especially to those most vulnerable and to those living in the Scottish Islands and Highland communities.”
Recommendations from the research include incentivising households to take up a ToU tariff, a price cap guarantee for vulnerable households – especially around the current level of energy prices – and including ToU tariffs on comparison websites.
Changeworks’ Isabella Impesi, a Senior Researcher, added: “If these tariffs are to become one of the main supply models in the future, we need to think more about the ways these tariffs are to be introduced together with Scottish consumers. The transition to a greener Scotland must be a fair and just one too.”
“Through this research, we co-created recommendation together with vulnerable consumers to explore how dynamic ToU tariffs could be made more attractive and appropriate to them.”
Read the full research paper