Energy

Tariffs for use: OVO Energy’s innovation

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We talk a lot about usage time rates, but now there is a new child on the block – type of usage rates. The first of these has been announced by energy supplier OVO and is designed to reward EV owners with cheaper car charging.

What is a type of usage fee?

One type of usage rate is one that charges one different rate depending on what you use that electricity to. In the case of OVO, customers pay a different price for electricity used to charge their car than for that used in their home (provided they have an OVO EV charger). The obvious benefit is that you do not have to plan specific activities, such as ensuring that your EV gets filled up when you need it, around specific time slots. On a broader scale, utility tariffs can help promote a low-carbon lifestyle by making specific choices such as electric cars even more affordable and appealing.

OVO’s Drive Anytime Plan

To participate in OVO’s type usage fee, called Drive at any time, you must be an OVO customer and charge your EV via one OVO smart charger.

You then pay 6p / kWh for car charging of electricity and your normal charge for household electricity. In real terms, you are billed at the normal rate for all your electricity consumption, but at the beginning of each month you do receive a credit against what is used to charge your EV in the previous month.

Example: In one month you use 350kWh of electricity in your house and 350kWh to charge your car. Your normal rate is 16p / kWh, so for the month you are billed £ 112 (700 x 0.16). You will receive one credit of £ 35 (350 x [0.16 – 0.06]) for EV charging.

OVO is currently testing this tariff with a small number of existing customers ahead of an expected national implementation later in the year.

It is also worth noting that although OVO claims that its tariffs provide 100% renewable energy, it does not get the power directly from the generators themselves, but is dependent on REGOs a controversial form of certification some consider greenwashing.

Similar innovations

Tariffs for use are just another example of the innovations that come from this age of transformation in the energy market.

Many suppliers offer tariffs for useful life – some with cheaper prices outside peak hours, others designed for low-cost EV charging overnight. They are also a great way to make use of home batteries by storing power when it is cheap and then using it during peak periods. OVO is also a key player in the new one V2G field.

Octopus, known for trying smarter energy platforms, has recently announced one ‘Fanclub’ rate it gives customers close to the turbines lower prices when it is windy. We are also a big supporter of the company Tesla Energy Plan, designed for solar and battery owners.

Will it catch on?

More sophisticated rates are proving popular among early adopters and will definitely be a part of one more dynamic grid when we transition to net zero. But while usage time tariffs just need a smart meter, usage type by type will require smart versions of the activity billed separately. This can make a big difference for applications like electric cars or heat pumps, which are likely to increase homeowners’ electricity needs significantly, so it’s definitely something to look at.

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