Economy 7 is a differential electricity tariff primarily offered in the United Kingdom, designed to encourage customers to use electricity during off-peak hours, typically at night. It is named "Economy 7" because it offers a cheaper rate for a continuous seven-hour period overnight, while charging a higher rate for the remaining seventeen hours during the day.
Mechanism: Under an Economy 7 tariff, electricity consumed during the designated seven-hour night period (off-peak) is charged at a significantly lower rate per kilowatt-hour (kWh) compared to electricity consumed during the day (peak). The exact timings of the off-peak period vary by supplier and region, but generally fall between 11:00 PM and 8:00 AM. A special two-rate electricity meter (often called an Economy 7 meter or multi-rate meter) is required to accurately record consumption at the two different rates.
Purpose and Benefits: The primary purpose of Economy 7 is to help balance the national electricity grid's load. Electricity demand is typically lower overnight, and power stations often continue to generate electricity even when demand is low. By offering a cheaper night rate, suppliers incentivize customers to shift electricity-intensive activities to these off-peak hours, thereby smoothing out demand peaks and troughs.
This tariff is particularly beneficial for households with:
- Electric Storage Heaters: These appliances use cheap night-rate electricity to heat up thermal bricks, releasing heat gradually throughout the day.
- Immersion Heaters: For heating water, the water cylinder can be heated overnight using the cheaper electricity.
- Electric Vehicles (EVs): Owners can charge their vehicles overnight when rates are lower.
- Dishwashers and Washing Machines: These appliances can be programmed to run during the off-peak period.
Considerations: While Economy 7 can lead to significant savings for households that can effectively shift a large proportion of their electricity usage to the night-time, it is not suitable for everyone. The day-time rate is typically higher than the flat rate offered on standard single-rate tariffs. Therefore, households that use a lot of electricity during the day, or who cannot significantly shift their consumption, may find a standard tariff more cost-effective.
Modern Context: With the rollout of smart meters and the advent of more flexible and dynamic tariffs (including time-of-use tariffs that can have more than two rates or vary more frequently), the traditional Economy 7 tariff has evolved. However, it remains a common offering, particularly for homes with older heating systems designed to take advantage of off-peak electricity.