As energy prices fluctuate and sustainability becomes more urgent, time-of-use (TOU) electricity tariffs have emerged as a practical tool for cost-conscious homeowners. When paired with a heat pump system, these variable rate structures can offer significant savings — but only if managed strategically.

In this article, we’ll explore how TOU tariffs work, how heat pumps interact with them, and provide smart strategies to help you maximize efficiency and lower your electricity bills.

What Are Time-of-Use Tariffs?

Time-of-use tariffs are electricity pricing models where the cost per kilowatt-hour (kWh) varies based on the time of day:

• Off-Peak (cheapest): Typically late at night to early morning

• Mid-Peak (moderate): Daytime hours

• On-Peak (most expensive): Late afternoon and evening

Utility companies implement TOU pricing to manage grid demand and encourage energy use during less congested periods.

Why Heat Pumps Are Ideal for TOU Optimization

Heat pumps are electric heating and cooling systems that operate most efficiently with consistent, steady usage — making them ideal for pre-heating or pre-cooling during off-peak periods.

Benefits include:

• Shifting energy usage to off-peak hours to save money

• Maintaining comfort with minimal impact on indoor temperature

• Utilizing thermal inertia (buildings and water tanks retain heat)

Smart Scheduling Strategies

1. Pre-Heat or Pre-Cool Your Home

Use your heat pump to warm or cool your home before peak rates begin. For example:

• In winter, heat your home from 4:00–6:30 AM and maintain temperature through the morning

• In summer, pre-cool your home early and reduce cooling cycles during peak

2. Integrate with a Smart Thermostat

Smart thermostats or building energy management systems can:

• Automatically schedule heating/cooling to avoid on-peak hours

• Adjust based on local TOU schedules and real-time weather data

• Use geofencing to reduce operation when no one is home

Popular smart thermostats (like Nest, Ecobee, or Tado) often allow integration with utility time-of-use data.

3. Use Thermal Storage

If your system includes water-based heating (such as radiators or underfloor heating):

• Heat your thermal storage (e.g., buffer tank or hot water cylinder) during off-peak hours

• Use the stored heat throughout the day without running the pump during expensive times

4. Avoid High Loads During Peak

Avoid other high-energy tasks (dishwashing, laundry, EV charging) during on-peak hours. Combined with heat pump scheduling, this multiplies your savings.

Real-World Cost Savings Example

Let’s say your TOU tariff is:

• Off-Peak: $0.10/kWh

• On-Peak: $0.35/kWh

If your heat pump consumes 20 kWh/day, shifting just 50% of usage to off-peak could save up to:

(10 kWh x $0.35) - (10 kWh x $0.10) = $2.50/day → $75/month → $900/year

⚠️ Important Considerations

• Comfort trade-offs: Pre-heating/cooling may require fine-tuning to avoid over/under-heating

• Not all homes are suited for long heat retention (especially older or poorly insulated ones)

• Confirm local TOU hours: These vary by region and utility provider

• Combine with energy monitoring tools for precise tracking

Bonus Tip: Pair with Solar PV for Maximum Gains

If you have solar panels, you can optimize even further by:

• Using your heat pump midday when solar generation is highest

• Storing thermal energy (hot water or pre-warmed rooms) for later use

• Minimizing grid reliance entirely during high-tariff hours

✅ Conclusion

Using a heat pump with time-of-use tariffs is a smart move that blends financial savings with environmental responsibility. With intelligent scheduling, thermal storage, and modern tech, you can dramatically reduce your energy costs without sacrificing comfort.

Whether you’re planning a new installation or optimizing an existing system, aligning your heat pump operation with TOU pricing is a future-forward strategy that pays off.