 What is economy 7 in electricity prices?
Economy 7 electricity is a fancy term for night time (red. cheaper) electricity. This cheaper electricity stems from so called "must run" electricity production at night. The hours at which this cheaper electricity is delivered varies from company to company but is usually from around midnight until 08.00 am. (Some companies use slightly different starting and ending times) The reason why electricity suppliers can charge lower prices for this night time electricity is a simple matter of supply and demand.
For obvious reasons, the demand for electricity in the night, whenoffices, house holds and most factories require less electricity, is very low. On the supply side we see that some electricity generation plants,(particularly coal and nuclear electricity production plants) need to run around the clock. The technical processes in these plants are such, that switching off the plant at night is just not cost effective or not even physically possible.Those kinds of plants therefore produce electricity 24/7 even at nightwhen demand for electricity is much lower than during the day.
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To incentivise night time energy consumption, the industry came up with the term Economy 7 to off load this excess night time electricity. The value ofnight time electricity is approximately one third of the value of daytime electricity. For consumers using this lower cost electricity at night can be an effective way of lowering your electricity bill.Examples of night time energy consumption by consumers are; running your washing machines, dryers, storage heaters, dishwashers, etc. at night using timers or using the delay function build in to your appliances.
For the generators it is also a good deal as it is better to sell the electricity produced at night at this lower price rather thanhave to keep constantly powering down and re-firing their generating plant as this causes additional wear and tear and holds additional risks to the producers. It is also a way to even out electricity consumption throughout a 24 hour time span. This helpsthe plants run more efficiently and (slightly) reduces the need for additional installed capacity and is also somewhat greener to produce.
Winners all round you might think; as long as you are willing and able to schedule your energy consumption during the night, yes! Especially with the recent developments in regards to smart meters with even greater control for both utilities and households.
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