Time of Use Tariff Report 2024

Executive summary

Time of use (ToU) tariffs: The best is yet to come

01

Occurrences of negative day-ahead electricity prices in Europe surged 12-fold from 2022 to 2023, driven mostly by increased renewable energy penetration. Hours with day-ahead prices above 100€/MWh also increased drastically, 587-fold in Germany between 2019 and 2023.

02

The combined load of electric vehicles (EVs), heat pumps and home batteries is expected to grow ten-fold in Germany between 2020 and 2030. ToU optimization allows users to leverage the flexibility of small-scale assets and reduce their energy bills.

03

A gridX survey revealed that most homeowners still manually adjust their consumption rather than using automated ToU features. ToU automation offers users the convenience and cost-savings they seek – they just need to understand the benefits and shift their behavior.

04

By combining expertise from different stakeholders across the energy value chain, the complexity of prosumer systems can be minimized. OEMs, tariff providers, EMS providers and consumer-facing brands must pool their expertise to develop the most user-friendly solution.

05

gridX’s time of use simulations found that ToU optimization can reduce a household’s energy bill (compared to static prices and no energy management system) by 25–132% across six major European markets.

06

Direct integration with a full range of energy assets, a tariff API that directly interfaces with electricity providers to relay real-time price information and an energy management system (EMS) that combines a local gateway and cloud optimization are key tools for effective and scalable ToU optimization.

Why jump aboard the ToU train?

Lower ToU rates naturally pull consumers to adjust their energy usage, rather than forcing them into it. This voluntary, incentive-driven approach fosters a partnership between energy providers and consumers, promoting a more sustainable future while strengthening consumer autonomy and satisfaction. ToU tariffs encourage a more stable grid, offer cost-saving opportunities for end consumers and open up new revenue streams for service providers. In short, they are the future.

Time of use optimization delivers savings in all markets

We conducted time of use savings simulations in six markets across Europe and found that ToU optimization significantly reduces an end user’s annual energy bill across the board – by at least 25%. In the United Kingdom, ToU could enable net negative energy bills. In Germany, time of use tariffs reduced an annual energy bill by €497 compared to a setup with only PV and no EMS.

Savings with Time of Use Tariffs in different European markets

Three reasons ToU is just getting started

Firstly, increasing prevalence of low-cost energy periods will make demand response, facilitated by ToU tariffs, even more attractive and financially rewarding for consumers. Secondly, by leveraging near real-time price data on the intraday market, a home energy management system (HEMS) could adjust plans on the fly, seizing opportunities that are not possible with day-ahead prices. And lastly, dynamic grid charges could be integrated into a full flex tariff, optimizing consumption not only for cost-effective electricity but also for grid-friendly transmission, benefiting both the energy system and end-users.