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Off-peak, smart meters and time-of-use pricing
Most households use hot water and appliances before and after work which creates high energy demand during certain periods of the morning and evening. If you can shift your electricity use to other times of the day, many energy retailers offer cheaper rates that can save you money.
For some households, taking advantage of time-of-use pricing by using energy outside peak times may be an effective way to reduce energy costs. Time-of-use pricing means you're charged at several different rates, depending on the time of day you use energy. Prices are usually divided between peak (2pm–8pm weekdays), shoulder (7am–2pm and 8pm–10pm on weekends) and off-peak (all other times) with off-peak being the least expensive. Using off-peak hot water and smart (or interval) metering are two ways to make use of time-of-use pricing.
Hot water makes up 25% of household energy use in the average home so switching an existing storage hot water system to an off-peak tariff can save you money on your energy bill. With an off-peak storage hot water system, your water is only heated during the off-peak time period when energy prices are cheaper.
However, it's important to be aware that off-peak systems don't use less energy or produce fewer greenhouse gas emissions just because they're only heating water during off-peak periods. In fact, many off-peak systems can use more energy overall as they tend to be larger to store hot water for use whenever it's needed.
When it comes time to replace your hot water system, the best way to reduce energy use as well as your energy costs is to consider switching to solar, heat pump or high efficiency gas. If you're considering upgrading your hot water system it's important to choose one that is right for your situation. To take advantage of off-peak, your existing hot water system must meet your energy retailer's requirements. This could affect the size and type of hot water system you currently use. A special meter may be required to monitor hot water separately to the rest of your bill so check with your energy retailer to find out whether you can access this option.
If you're mainly using your electricity during off-peak and shoulder periods—or are willing to shift your usage to these times—having a 'smart' or interval meter installed may be cost effective.
An interval meter measures your power use in 30-minute intervals and allows your distributor to charge different rates rather than one flat rate. Unlike the older mechanical meters, interval meters communicate meter readings directly to electricity distributors which means you don't need someone to come and read your meter, saving money on connection and disconnection fees. Some models also allow two-way communications between households and energy distributors in real time. A web portal or in-home display connected to certain types of smart meters will allow your household to get a more detailed picture of energy use which can help you alter household preferences to save energy and money.
If you have a smart meter installed and decide to take up time-of-use pricing the more you shift away from peak power the more you save. For example, by turning your dishwasher on before going to bed rather than after dinner or by using your clothes dryer only on weekends. There are further savings to be made if you have appliances that use a lot of power, such as pool pumps or air conditioners. It can also work well with in-slab electric heating (check your operating manual or with the manufacturer to ensure compatibility with their products).
In considering time-of-use pricing, look at your household preferences very carefully. It's possible that if you switch to off-peak but then find you're using more electricity during peak times, you'll end up paying more. For example, if you're a busy family with young children who all need to be fed, bathed and in bed by a set time each evening, you'll have no choice but to use energy in the peak evening period. If you're interested in off-peak hot water or smart metering, contact your energy retailer first to see if it's possible and to find out what you need to do.
If time-of-use pricing isn't the right fit for your household, or you're not able to sign up for it, there are plenty of other ideas on Your Energy Savings you can take to reduce your energy bills.
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