Pricing: As we accelerate toward a net-zero electricity system, the time has come to challenge some long-held assumptions, starting with how we price electricity.
For decades, time-of-use tariffs made perfect sense. The grid followed a fairly predictable daily rhythm: higher demand during mornings and evenings, lower usage overnight. Electricity was cheaper at night not because it was cleaner, but because demand was low and base-load generators (often coal or gas) kept running anyway. We encouraged consumers to charge EVs, heat water, and run appliances overnight. And many still do.
But the grid is changing fast. And so should our thinking.
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A Grid Powered by Weather, Not the Clock
Today, the UK and other countries are rapidly shifting to renewables, especially solar and wind. These sources don’t follow the old daily demand patterns. Instead, solar peaks around midday, and wind can be strong or weak at any hour.
As a result, the cleanest and cheapest electricity isn’t always at night pricing anymore. In fact, there are many days when midday electricity has the lowest carbon intensity because it’s mostly powered by solar and wind. At night, fossil fuels still creep back in to meet residual demand.
So, while time-of-use tariffs still exist, and may help smooth grid demand, they increasingly fail to reflect the true cost, or the true carbon, of what’s powering our plugs.
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Smart Meters, Smarter Signals
The good news? We already have the tools to fix this.
Most homes and businesses now have smart meters. These devices can report and respond to electricity use in half-hourly intervals. That opens the door to dynamic, intelligent pricing, tailored not just to demand but to:
The actual carbon intensity of the grid
The real-time cost of generation
The availability of renewables
We don’t need to over-complicate things for the end user. Instead, smart meters should offer a simple signal: now is a green time to use energy, or now is a brown time—perhaps even with pricing incentives or nudges to encourage shifting demand.
Rather than fixed peak/off-peak schedules, we could move to carbon-aware energy use, where households and businesses are empowered to align their consumption with periods of low-carbon electricity.
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A Fairer and Greener Future
Why does this matter?
EV charging: Encouraging overnight charging made sense when off-peak was cleaner and cheaper. Today, that’s not always true. Real-time carbon intensity signals would allow EVs to charge when the grid is greenest—often during daytime solar surpluses.
Industrial operations: Businesses could shift high-energy tasks to windows when renewable generation is high, cutting costs and emissions simultaneously.
Home energy use: Simple traffic-light indicators (green, amber, red) could prompt consumers to run dishwashers or laundry during cleaner periods—no spreadsheets or graphs required.
The goal isn’t to make energy pricing more confusing. It’s to make it smarter, and reflect the real impact of our choices.
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What Needs to Happen
To make this a pricing reality, we need:
Suppliers and regulators to support dynamic tariffs linked to carbon intensity
Smart meter platforms to deliver easy-to-understand signals
Consumers to be engaged and informed, not overloaded with complexity
Businesses to align operational schedules with green energy windows
And most importantly, a mindset shift: away from rigid peak/off-peak habits and toward flexible, carbon-aware consumption.
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Let’s Shift the Equation
Time-based pricing served us well in the fossil fuel era. But in a grid defined by sunshine and wind, we need a new logic—one that prices electricity based on its carbon cost, not just the clock.
The future of electricity isn’t just smart. It’s intelligent, clean, and carbon-aware.
And with smart meters in millions of homes and businesses, we already have the infrastructure. Let’s use it.
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