A major energy supplier is offering cheaper rates for its customers - provided they can shift their power use to off-peak times.

Eon Next has launched the first fixed time-of-use tariff for all customers, offering up  electricity at close to half-price between 2am and 5am. 

The 12-month fixed tariff will also charge households cheaper rates than the energy price cap in other off-peak periods. 

These 'time of use' deals are usually only offered to those who have green gadgets such as heat pumps and electric vehicle charges - but Eon's is open to all.  

How do these tariffs work, and are they worth it?

What are time-of-use tariffs?

The electricity grid is powered by different energy sources, including gas and renewables, and more is used when there is more demand.

It means that during peak periods, usually in the evenings, more gas is burned to meet the increased need.

Energy companies are subject to various targets and penalties which incentivise them to reduce the gas they use. 

That's why they introduced time-of-use tariffs, charging a lower rate to encourage households to use less electricity during peak times.

Unlike a standard variable rate tariff or fixed tariff, electricity prices will vary between peak hours, off-peak hours and super off-peak hours.

What is Eon's new tariff?

Eon's 'Next Smart Saver' tariff acts like any other time-of-use tariff, offering customers lower rates at certain times of the day.

The 12-month fixed tariff offers cheaper rates than a standard variable tariff and higher rates during peak hours when demand is higher.

Customers using electricity between 5am-4pm and 7pm-2am will pay the off-peak tariff charged at 20.11p/kWh, nearly 7p cheaper than the price cap rate of 27.03p/kWh.

The super-off-peak rate is 16.33p/kWh between 2am and 5am, while the peak rate will cost 38.48p/kWh between 4pm and 7pm.

That means that customers will pay less than the price cap if they can shift their usage away from the peak period, but if they're unable to, they will pay 10p more than the price cap.

Crucially, there are no exit fees on Eon's new tariff which means customers can leave if their circumstances and usage habits change.

Ramona Vlasiu, chief operating officer at Eon Next, says: 'With energy prices fluctuating, we know customers are looking for ways to take control of their bills.

'However, this isn't just about individual savings; it's about smarter energy use for the whole country. As the UK moves towards a greener, cleaner grid, shifting demand away from peak times will play a crucial role in reducing strain on the network.'

Will this new tariff work for you? 

To sign up for a time-of-use tariff, you'll need a smart meter and crucially, be able to move your electricity use to off-peak periods.

Typically people who use a time-of-use tariff have an electric car, or a battery storage system for their home. 

This means they can charge their car or home battery overnight when demand is lower, and avoid using the grid - but still have power - during the day. 

However, Eon's tariff means that any customer - even those without an EV or battery - will be able to benefit from the cheaper rates. If you're able to shift your usage away from the peak hours of 4pm to 7pm then you will stand to benefit.

A spokesperson for Uswitch said: 'These tariffs won't be right for everyone. The super off-peak window is between 2am and 5am — a time when most households are asleep and unlikely to use appliances, but it could suit those who can schedule when they run.

'Electric vehicle owners should also be cautious — although the tariff includes lower overnight rates, they're still not as competitive as the 7p/kWh available on some specialist EV charging deals.' 

If a time-of-use tariff won't work for you, you might be better off opting for a fixed deal tariff and locking in your savings for between 12 and 24 months. 

The cheapest fixed deal currently available from a large supplier is priced at £1,549, £300 cheaper than the price cap.