Economy 7 has been around for a long time. It is the “original” time of use electricity tariff. Called “Economy 7” because the customer received 7 hours of cheaper electricity. This 7 hour period is then used to consume a lot of electricity, almost exclusively to heat the home. But there are lots of misunderstandings about how Economy 7 works in the modern era. Here we take a closer look at these Economy 7 misconceptions.

The first thing to understand is that the way an energy firm such as Octopus Energy view Economy 7 is that it is simply a time of use tariff. Note – this may not be how all energy supply firms characterise it.

As such, Economy 7 is just one of many time of use tariffs that Octopus offer. What this means is that where the customer has a smart meter, all electricity that is consumed during the Economy 7 period is priced at the off-peak rate.

The key factor here is the bit about the “smart meter”.

Almost all homes built with the express purpose of using an Economy 7 tariff come with 2 separate electricity circuits, and 2 corresponding electricity meters. Circuit 1 operates the heating (and possibly the hot water), and circuit 2 operates the rest of the house. In this set-up, all electricity consumed on circuit 1 is billed at the Economy 7 rate, and all electricity consumed on circuit 2 is billed at the peak rate. Circuit 2 is only “live” during the Economy 7 period, and circuit 2 is “live” 24 hours a day.

These homes can really benefit from the move to a smart meter. By replacing the 2 separate meters with one modern Generation 2 SMETS2 smart meter, you can benefit hugely.

Rather than having all electricity on circuit 2 billed at the peak rate, this circuit also benefits from the off-peak rate. The smart meter simply notes any and all electricity consumed within each half-hour period, and the customer is then billed at the appropriate rate.

For the avoidance of doubt, the circuits stay exactly the same – the heating is still controlled via a separate circuit.

Circuit 2 can then have solar and battery storage wired into that circuit. The battery can be charged up at night (on the Economy 7 rate) and discharge during the day.

The other thing to note is that since the Economy 7 home now has a smart meter, you could in theory choose to move to another time of use tariff offered by Octopus. In practice this might not be a great idea, since the storage heaters probably won’t receive a full charge unless they are receiving the full 7 hours of “charge” available with the Economy 7 tariff. Alternative tariffs such as Octopus Go only offer 4-5 hours of off-peak rate, versus the full 7 hours on Economy 7.