New time-of-use tariff dangles huge daytime power discount – but is it a good deal?

Energy Locals is hoping to expand its customer base in the renewables heavy state of South Australia, with the offer of a “lowest in the market” electricity usage rate of 14.4c/kWh for five hours of each day.

The Daytime Saver plan is targeted at households able to take advantage of periods during the middle of the day, when cheap solar floods the grid, by shifting their heaviest daily energy loads to between 10am and 3pm.

The deal is also best suited to non-solar households – and allows those consumers unable to install PV themselves, including renters and apartment dwellers, a share in the benefits of cheap, rooftop generated power.

Energy Locals says that in the hours between 10am and 3pm, South Australian customers who sign up to the Daytime Saver plan would pay 65% less for their energy compared to peak usage rates, and get up to 16% off the reference price depending on the network and tariff.

On the other side of the coin, however, customers should be aware that the rate for electricity jumps to 41.40/kWh between 5pm and 10pm, and evens out at 22c/kWh at all other times.

The deal also includes a monthly membership fee of $16.49 a month, supply charge of $1.00 per day and requires a smart meter.

Energy Locals says the lowest annual cost for electricity would be $1,866, based on residential usage of 4000 kWh/year on a time-of-use tariff on the SA Power Network grid.

The Daytime Saver plan from Energy Locals extends to other states, too – in Victoria it offers an even lower off-peak rate in Victoria of 8.5c/kWh from 10am to 3pm and 24c/kWh for the rest of the time.

“Solar energy is at its peak during the middle of the day. By encouraging energy use during this time, South Australians can consume more renewable energy and reduce their carbon footprint,” says Energy Locals founder Adrian Merrick.

”Whether you work remotely, care for your family, or simply enjoy spending time at home, this plan allows you to use electricity for all your needs – from doing laundry, running cooling and heating, to charging your electric vehicle – without worrying about sky-high bills.”

An increase in time-of-use (TOU) retail tariff offers coming onto the market is part of a much bigger shift in the energy landscape, as electricity networks start to think seriously about how they can design wholesale tariffs to better shape consumer behaviour around the solar duck.

In Victoria, the latest five-year plans from the state’s main distribution network companies have both proposed introducing low-priced “solar soaking” periods from 11am-4pm as part of new time-of-use tariffs.

Essentially, they are offering an incentive to customers to help soak up excess solar that – for them – is starting to send demand to zero and below hours at a time.

The networks are also hoping that the shift to electrification – and particularly electric vehicles – will be a part of this change in behaviour, as customers look for the cheapest time of the day to fuel up their cars from the grid.

AusNet, for example, forecasts that the number of all-electric homes on its network will jump from 23 per cent in 2023 to 57 per cent by 2030, while the number of electric vehicles on the grid will go from 0.5 per cent to 12 per cent.

Minimum demand in the network is anticipated to fall below zero by 2024/25, AusNet says, continuing a negative trend until a plateau around 2031, when electrification growth is expected to become stronger than rooftop solar growth.

So far, voluntary customer uptake of TOU tariffs has been pretty poor, while attempts to make them the default option for new customers remain highly controversial for their potential to deliver bill shocks to uninformed and vulnerable households.

The recent experience of Renew Economy editor Giles Parkinson, who was unknowingly switched to a TOU plan with the installation of a smart meter in regional New South Wales, is a worrying cautionary tale.

The switch to the Origin Energy plan, which the gentailer says was done in error, applied a peak rate of just under 50c a kilowatt hour (kWh), nearly 43c/kWh for the shoulder period – which is for most of, and 29c/kWh for off-peak period, between 10pm and 7am.

“The company insists that shifting households with newly installed smart meters to ToU bills was and is not their policy, and that our experience is unique, or at least a rarity,” Parkinson wrote.

“Rotten luck, then, that it should occur to one of the country’s few energy journalists, who could work out what was going on.”

Indeed.

Ultimately, success in winning customers over to TOU tariffs will come down to the efforts and good faith of the retailers. Outfits like Energy Locals, which came on the scene as an antidote to the incumbents, and with a strong focus on renewables, are a good place to start.