Economy 7 Energy Tariffs

What are Economy 7 tariffs?

Economy 7 (E7) tariffs are time-of-use electricity contracts with a cheaper off-peak per-unit rate for electricity and a more expensive rate for daytime use. They’re called Economy 7 because the discounted off-peak period typically lasts for seven hours.^[1]

Economy 7 tariffs are designed for households that consume more electricity overnight, especially those that use electricity rather than gas to heat water and keep their homes warm.

To use an Economy 7 tariff, you’ll need a two-rate Economy 7 meter, which records your usage both during the discounted off-peak period and during the day and produces two separate readings. Smart meters can also be configured for Economy 7 tariffs.^[1]

What time does Economy 7 start?

The exact time that the off-peak hours of an Economy 7 tariff begin depends on your location, your energy supplier, and your meter type. The seven hours are usually continuous and fall somewhere between 10 p.m. and 8 a.m. For example, midnight to 7 a.m. is common.

Major energy suppliers have published the following times for their Economy 7 tariffs. You should check with your chosen energy supplier to confirm these times are still valid:

Is electricity cheaper at night?

Demand for electricity is lower at night, as most people are asleep, their lights are off at home, and their workplaces are closed.^[2] With lower demand comes lower wholesale electricity prices - those paid by energy suppliers.^[3] However, energy suppliers typically don’t pass on these cheaper overnight rates to customers unless they’re on time-of-use tariffs.

There are several types of time-of-use tariffs. As we’ve been discussing, Economy 7 tariffs provide cheaper electricity for seven hours at night. The overnight rates are usually at least a third (33%) cheaper and sometimes as much as 50% cheaper than daytime rates, although this varies by supplier.^[4][5]

More recently, specialised tariffs have been developed, offering cheaper overnight electricity rates for households charging electric vehicles (EVs).^[6] These discounted rates typically last often for four to six hours, usually enough time to fully charge up an EV's battery.

Finally, smart meters, providing half-hourly updates on a household’s energy consumption, will enable the future development of smart time-of-use tariffs.^[7] Octopus Energy currently offers a beta smart tariff known as Agile Octopus, which offers discounted rates when electricity is the cheapest and greenest. These discounted periods are often overnight but aren’t always.

How to read an Economy 7 meter

Standard electricity meters have just one reading you need to take down. Economy 7 meters will display two or three readings, and you need to submit all of them to your energy supplier for an accurate bill.

With Economy 7 meters, one reading will represent your daytime use, while another will represent your nighttime, off-peak use. If your meter has a mechanical or dial display, the daytime reading will often be labelled “normal” and the nighttime reading “low.”

Sometimes the meters will also display a third number, totalling the daytime and nighttime readings together. If you have a meter with a single digital display, you may have to press a button to cycle between the two or three readings.

Can I get an Economy 7 tariff?

To get an Economy 7 tariff, you need an Economy 7 electricity meter or a smart meter that can be configured to offer Economy 7 pricing. You’ll also have to be with an energy supplier that is still signing up new customers for Economy 7 tariffs. Some have withdrawn these tariffs from the market, although they may continue to offer them to legacy customers.

You also need to consider whether it’s suitable for you. In general, an Economy 7 tariff makes financial sense if you use at least 40% of your electricity overnight.^[8] This will likely be the case if you heat your home with electric storage heaters rather than a gas boiler and radiators. These retro heaters draw electricity overnight and store it as heat in ceramic or clay bricks.^[9] They then release this thermal energy during the day, warming your home.

Some electricity-only households may also have Economy 7 hot water tanks. Designed to take advantage of the cheaper overnight pricing of Economy 7 tariffs, they have two immersion heaters programmed to work at different times of the day. The larger one, located at the bottom of the cylinder, heats water overnight, for use during the day. The top third of the cylinder is taken up by a smaller tank, which can be used to heat a smaller quantity of water with more expensive daytime electricity to top up your hot water supply when you need it.

People with electric vehicles (EVs) to charge or regular night owls may also want to consider Economy 7 tariffs. However, you should check your energy bills before committing, as if you’re not using at least 40% of your electricity overnight, an Economy 7 pricing structure will lead to you overpaying.

Can I get an Economy 7 tariff for gas?

No, the Economy 7 tariff is only for electricity and doesn’t cover gas.^[10] There isn't a similar tariff offering discounted gas rates overnight. This is because gas, as it’s primarily used for heat, doesn't experience the same sharp drop in demand overnight that electricity does.

Economy 7 vs Economy 10: What’s the difference?

In addition to Economy 7, there is a similar tariff known as Economy 10, which provides 10 hours of discounted electricity per day.^[11] Usually, seven of these discounted hours are overnight, and three of them are during the day.

However, the scheduling can be even more complicated, with some plans offering three discounted hours in the afternoon, two in the evening, and five overnight. Therefore, you must be disciplined and watch the clock to get the most out of an Economy 10 tariff, waiting until your discounted window to run your washing machine, for example.

Economy 10 tariffs are rarer than Economy 7 tariffs, although they are still available from some suppliers.