What is the difference between a dynamic and a time-of-use tariff?

A time-of-use tariff has fixed cheap and expensive periods, for example at night. A dynamic tariff changes every day with the wholesale market, and prices are usually published the day before.

Do I need a battery for a dynamic tariff?

No. Shifting the washing machine, dishwasher or electric car charging to cheap hours already helps. A battery adds flexibility for consumption you cannot move.

Can prices be negative?

Wholesale prices can drop below zero when wind and solar output exceed demand. Whether that reaches you depends on the tariff, because taxes, levies and network charges are added on top.

Does plug-in solar work with a dynamic tariff?

Yes. Solar output tends to coincide with lower midday prices, so self-consumption saves a little less per kWh than on a flat tariff, while a battery can move solar power into pricier evening hours.

Dynamic electricity tariffs and home batteries explained

A dynamic electricity tariff passes the changing wholesale price on to you, hour by hour or half hour by half hour. When wind and sun flood the grid, power gets cheap; on a still winter evening it gets expensive. With a smart meter and some flexibility, and optionally a battery, you can buy more of your power in the cheap hours. Checked: October 2026.

How a dynamic tariff is built

Your price per kilowatt-hour on a dynamic tariff has two parts:

Part	Varies?	What it contains
Energy price	yes, every hour or half hour	wholesale day-ahead price plus the supplier’s margin
Fixed components	mostly not	network charges, taxes, levies, standing charge

Because the fixed components make up a large share of a household bill in many countries, the swing you see on your bill is smaller than the swing on the wholesale market. That is the first thing to understand before expecting large savings.

Prices for the next day are usually published in the afternoon, once the day-ahead auction has closed. Supplier apps show them as a chart, and many connect to smart plugs, car chargers or batteries to act on them automatically.

Why you need a smart meter

A supplier can only bill you by the hour if your meter records consumption by the hour. Traditional meters only show a running total. In Great Britain, most dynamic and time-of-use tariffs require a SMETS2 smart meter. In Germany you need an intelligent metering system (intelligentes Messsystem); since 1 January 2025 every supplier there must offer a dynamic tariff to customers who have one, under § 41a of the Energy Industry Act. At EU level, the electricity market directive requires larger suppliers to offer dynamic price contracts, which is why such offers are spreading across member states.

UK examples

In Great Britain, Octopus Energy has offered half-hourly tariffs for several years. Its Agile tariff follows wholesale prices with a price published the day before; its Flux tariff is a three-rate design aimed at homes with solar and a battery, with a cheap overnight window and a better export rate in the late afternoon. Other suppliers have similar time-of-use products. Compare current terms directly with suppliers, as rates and caps change.

Where a battery fits in

A home battery can use a dynamic tariff in two ways:

Solar shifting. Store midday solar power and use it in the evening, when prices are typically higher. This works with plug-in solar too; see plug-in solar with a battery.
Price arbitrage. Charge from the grid in the cheapest hours and discharge in the most expensive. This only works if the battery can charge from the grid, which many plug-in batteries cannot.

The arbitrage arithmetic

Whether arbitrage pays depends on three numbers you can check yourself:

Price spread: the difference between the cheap and the expensive hours on a typical day.
Round-trip efficiency: how much of the stored energy comes back out, according to the manufacturer’s data sheet.
Usable capacity and cycles: how many kilowatt-hours you can shift per day, and how many cycles the battery is rated for.

The rule of thumb: the price spread must be larger than the losses plus the wear on the battery per kilowatt-hour cycled. On days with a small spread, arbitrage earns nothing; on volatile days it can earn a little. Treat it as a bonus on top of solar shifting, not as the main reason to buy a battery. How big a battery should be is covered in home battery sizing.

Who benefits, and who does not

A dynamic tariff tends to suit households that:

have an electric car, heat pump or other large load they can move to cheap hours;
have solar and a battery that can be controlled by price;
are comfortable checking an app or letting automation do it.

It is less attractive if most of your consumption falls in the early evening peak and cannot be moved, or if you prefer a predictable monthly bill. Some suppliers cap the maximum price; check whether yours does.

Dynamic tariffs and the grid

Dynamic prices are a signal from the system: they reward using power when it is abundant. When thousands of batteries and cars respond to that signal together, they start to behave like a power plant. That idea is taken further by virtual power plants, where an aggregator controls many small devices at once.

Next steps

Check whether you have, or can get, a smart meter.
Look at your consumption pattern: how much could you move to cheaper hours?
Compare a dynamic offer with your current tariff over a full year, including standing charges.
Decide whether solar and storage come first, using feed-in or self-consumption as a guide.

More on tariffs and self-consumption is on the tariffs hub.