Smart Tariffs and Heat Pumps: Agile, Flux, and Cosy Octopus Explained

Heat pumps are high-electricity-consumption devices. At 24.5p/kWh on a standard tariff, running costs add up. But smart time-of-use tariffs - originally designed for EV charging - are increasingly popular with heat pump owners and can reduce electricity costs by 20-40%.

The principle is simple: electricity is cheapest overnight (typically 7p-12p/kWh) when grid demand is low, and most expensive in the evening peak (5pm-8pm, sometimes 40p+ per kWh on Agile tariffs). Heat pumps work best when paired with a thermal store or hot water cylinder that can absorb cheap overnight energy and release it throughout the day.

Octopus Cosy is the most heat-pump-friendly tariff currently available. It offers six cheap hours per day (9-11am and 2-7pm) at around 12p/kWh, plus standard rates outside these windows. These times align well with solar generation if you also have solar panels. Average saving for heat pump households: £200-400/year versus a standard flat rate.

Octopus Agile prices electricity at half-hourly intervals based on the wholesale market. In summer, prices regularly drop below 5p/kWh (occasionally negative). In winter, prices spike. Heat pump owners with a smart home energy management system can automate charging during cheap periods. Average saving: £300-600/year for disciplined users.

E.ON Next Drive tariff and Intelligent Octopus are alternatives worth comparing. The key specification to look for: cheap overnight rates below 10p/kWh, and whether the supplier has a heat pump-specific offering that integrates with major brands.

One practical note: smart tariffs work best with a properly set-up weather compensation curve and a hot water cylinder of at least 200 litres. If your heat pump was installed without these, speak to your installer about optimisation. The controls setup is as important as the tariff choice.