Your ultimate guide to energy tariffs

With so many energy tariffs to choose from, it can be tricky to work out which one is right for you. That’s where our guide comes in. 

We’ll cover the different options and things to consider when you make your decision. But before we get started…

What's an energy tariff

An energy tariff is a plan that decides how much you’ll pay for gas and electricity. No matter which tariff you choose, your energy bill will always be made up of 2 costs:

• The unit rate – this is the price for each unit of gas and electricity you use, measured in pence per kilowatt hour or p/kWh.  
• Standing charge – this is a fixed amount that’s charged daily, no matter how much energy you use. 

To understand energy tariffs in more detail, it’s helpful to know a bit about the energy price cap first.

What’s the energy price cap?

It’s a limit on the amount of money suppliers can charge for each unit of energy you use, as well as the daily standing charge. The price cap is set by Ofgem, who are the energy regulators for Great Britain. And it’s reviewed every 3 months, which means it could go up or down. 

When this happens, the new price cap is usually announced a month before it’s updated. It’ll only affect you if you’re on a variable tariff, and your energy supplier should let you know what the change will mean for you.

Why do we need the energy price cap?

The price cap was introduced in 2019 to make sure customers pay a fair price for their energy. It can also help avoid a "loyalty penalty" – this is where customers could end up paying more for staying with the same supplier, instead of switching.  

How is the price cap calculated?

It’s based on the different costs energy companies face, from maintenance to operating costs and more. But the biggest factor is the price of wholesale energy. That’s the amount suppliers pay for gas and electricity. Because wholesale energy prices are constantly changing, the price cap needs to change too.

Want to learn more about the energy price cap? Head over to the Ofgem website for all the details. Otherwise, get ready to dive into energy tariffs.

Meet the tariffs: from variable to dual fuel and more

Now we’ve covered the basics, let’s take a look at the different types of energy tariff, starting with the UK’s most popular. We’ll round up each one with their pros and cons to help you compare.

Variable tariffs

Now we’ve covered the basics, let’s take a look at the different types of energy tariff, starting with the UK’s most popular. We’ll round up each one with their pros and cons to help you compare.

Book a home energy assessment

A standard variable tariff (or SVT) is where your unit rates and standing charges can go up or down, depending on what’s happening in the energy market. These tariffs are governed by the energy price cap.

For example, if wholesale prices rise, suppliers will have to pay more for the energy they buy – and that could impact the amount you pay too. Your energy company should give you the option to switch tariffs if prices go up. 

On the other hand, you could save money on a variable tariff if energy prices drop. And there are other benefits to consider.

Pros

• Flexibility – variable tariffs don't come with exit fees, so you’re free to switch any time you like.
• You’re covered by the price cap – even though energy prices can change, there will always be a limit on how much suppliers can charge thanks to the price cap.
• Saving potential – if energy prices go down, so should your bills.

Cons

• Price rises – you could end up paying more on a variable rate if energy prices increase.
• Less control – without knowing how much each unit of energy and the standing charge will cost, it might be tricky to budget.

Think a variable rate tariff could be the one? At OVO, we keep our standard variable tariff simple. That’s why we call it Simpler Energy.

You can join today, and switch again any time you like. Or keep reading if you’re wondering what else is out there. Next up: fixed rates.

More info on energy

​​That’s it for our 5 ways to lower your energy bills, but head over to our Help Centre if you want to find out more. Whether you’re looking to reduce your carbon footprint or save energy when renting, we’ve got you covered.

Dual fuel tariffs

As the name suggests, dual fuel tariffs combine both gas and electricity. That means you get one bill, from one energy supplier. 

Sounds convenient, right? But it’s not always the cheapest option, so it's a good idea to compare different tariffs to find what works for you.

Pros

• Convenience – with one bill from a single supplier, it might be easier to budget, switch, or contact your energy company with any queries.
• Special offers – some suppliers offer discounts for customers who sign up for a dual fuel tariff.

Cons

• It could cost more – you might be able to save money by having separate gas and electricity tariffs. This isn’t always the case, so it’s best to shop around.

At OVO, all of our tariffs can be dual fuel. So if you’ve already found the one for you and want convenience on top, then you can get a quote today.

Economy 7 tariffs

These are electricity tariffs that give you cheaper rates at night and more expensive rates in the day.  They can be more cost effective for some homes, like if you have a storage heater or charge your car overnight. But Economy 7 tariffs aren’t right for everyone, especially if you use most of your electricity during the day.

Pros

• You could save money – if you use more than half of your electricity during the night, an Economy 7 tariff should work out cheaper than a regular one. 

Cons

• It might be more expensive – on the other hand, the daytime rates are usually much higher, so it’s only worth it if you make the most of the overnight rates. 
• Exit fees – some Economy 7 tariffs come with exit fees, so always read through your contract before you sign up.

Want to know more? Good news, we’ve got a whole guide on Economy 7 tariffs that gives you all the details.

Greener tariffs

These tariffs usually support the shift to renewable energy in some way, or they might use different methods to be greener. There’s a lot to take in here, so instead of breaking down the pros and cons, let’s cover the key things to know when comparing greener tariffs. 

What’s renewable energy?

This energy comes from natural sources that can be constantly topped up again, like solar, wind, or hydroelectric power. 

Some suppliers claim to sell energy that’s 100% renewable. And to be able to say that, lots of them buy certificates called REGOs (Renewable Energy Guarantees of Origin). But our research shows that REGOs don’t actually make the UK’s electricity grid any greener. The Energy Saving Trust has more info on this too.

If your energy supplier buys renewable electricity directly from generators, there’s a better chance it’s benefiting the UK’s renewable industry. 

More ways to be greener

Some companies might also make their tariffs greener by contributing to renewable energy projects on your behalf. And other tariffs might be nuclear free, include carbon offsetting, or combine these methods.

What’s carbon offsetting?

It’s when a company reduces or removes carbon from the atmosphere to make up for their emissions elsewhere. But it doesn’t stop carbon from entering the atmosphere in the first place, and some schemes can be misleading. The WWF has advice on what to look out for when it comes to carbon offsetting.

At OVO, we’re committed to reaching net zero by 2035 – by cutting our carbon emissions by 90%, and only offsetting 10% of the emissions we can’t avoid or reduce.

Are greener tariffs more expensive?

Because renewable technology and sustainable projects need investment, these tariffs are usually more expensive – but not always.  Most energy suppliers now offer greener tariffs, so the competition is high. Shop around, and you could find a deal that’s better for your pocket and the planet. 

Getting greener power from OVO

With our Greener Electricity upgrade, you get 100% renewable electricity from traceable sources, backed by Power Purchase Agreements we have with UK-based generators¹.

And you’ll help to grow a greener grid for the UK too. That’s because for every year you have Greener Electricity, £20 goes towards helping independent renewable generators get started.

Smarter energy tariffs

If you’ve already made a few upgrades around your home, pairing your tech with a specialised tariff could help you save money. Here, we’ve listed some of the most popular upgrades and the tariffs to go with them.

Solar panels

If you’ve got solar panels, wind turbines, or something similar, you can export the electricity you generate to the National Grid – and get paid for it. It’s called the Smart Export Guarantee, or SEG for short, and it replaced the government’s Feed-in Tariff which ended in March 2019. 

Energy companies will offer their own SEG rates in pence per kilowatt hour, and they can be fixed or variable. So, as always, do some digging to find the best deal. 

Thinking of going solar? At OVO, we've got exclusive SEG rates for energy customers who buy their solar tech from us. Here’s how that could look:

*Our exclusive SEG rates of 20p and 15p are only for OVO energy customers who also bought their solar installation through OVO.

You can even spread the cost of your solar panels over 3 years, with no interest. Longer term finance options are also available, or you can pay in full. The choice is yours. To find out more, head over to our website.

All finance is subject to eligibility and terms. OVO is a broker, not a lender.

Electric vehicles

If you charge your car at home, then there’s probably an energy tariff out there that can help you save money. Most electric vehicle (EV) tariffs fall into 2 categories:

• 2-rate tariffs – this is the most common, and offers different charging rates depending on the time of day, with much lower rates at night. A bit like an Economy 7 tariff.
• Single-rate tariffs – this is where you pay the same rate in the day, but it's discounted if you have an EV, or you get extra rewards like credit on your bills.

Remember, there’s no right or wrong choice – it all comes down to what works for you.  At OVO, we’ve got a free add-on called Charge Anytime. It lets you smart charge your EV at a lower rate any time you like, day or night. And even if you’re not with us, you can check your compatibility before you switch.

Heat pumps

Got your heat pump up and running? Then you’ve probably already started saving on your energy bills. And picking the right tariff to go with it could help you save even more. 

Most tariffs let you power your heat pump at a lower rate. So you'll pay one rate for the electricity your heat pump uses, and another for the electricity the rest of your home uses. Nice.

You can usually only unlock the cheaper rate at certain times of the day – but not with Heat Pump Plus. Our free add-on lets you power your heat pump for less, 24/7. Check if you’re eligible by answering a few quick questions. 

How to choose the right tariff for you

It’s official – you’re now an energy tariff expert. And if it’s time to make your decision, we’re here to help with that too. 

A few things to keep in mind when choosing your tariff:

• Budget – ask your supplier how much you spent on energy in the past year, or check your online account. Having the numbers to hand might make it easier to compare and spot ways to save.
• Energy use – is it mostly electricity or gas? In the day or at night? These might be good questions to ask yourself at the start of your search.
• Your priorities – whether it’s convenience, saving money, going greener, or finding a happy medium. Think about what matters most when it comes to your energy. 

With this in mind, you’re ready to head out into the world of energy tariffs. 

Comparison websites like Uswitch and Go.Compare are great places to start. You could also check Trustpilot to see what other customers think before you choose a supplier. 

And if you have any questions about our energy tariffs along the way, you can always get in touch – we’ll be happy to help.