OVO launches the UK’s first type-of-use heat pump tariff

02 March 2022 | OVO Energy

The energy industry is forever innovating. And never more so than in the transition towards using electricity instead of gas to heat our homes.

OVO Energy is a pioneer in developing innovative energy solutions and technologies to make the energy network smarter – such as launching the world’s first domestic vehicle-to-grid charger back in 2018

As the nation switches away from gas boilers to low-carbon alternatives such as air source heat pumps, we’ve been exploring new possibilities. 

And now, we’re proud to announce the groundbreaking trial of our type-of-use heat pump tariff, Heat Pump Pro. This trial is at the cutting-edge of home energy supply, and it’s the first of its kind in the UK. 

Our new Heat Pump Pro tariff allows members to pay a lower rate for energy used to power their heat pumps. With this progressive rate, we’re finding a way for the electrification of heat to be more accessible to more people – and are making it possible for OVO members to get closer to zero carbon.

The Local Energy Market (LEM) and the Heat Pump Pro type-of-use trial

It’s a bit of a mouthful, so we’ll break it down to explain exactly what you need to know.

What is the Local Energy Market project?

The Local Energy Market project is currently underway in the Greater Manchester area. The project aims to work out whether it’s possible to create a region-wide local energy market. 

During the project, OVO Energy, the Greater Manchester Combined Authority (GMCA) and other partners, are revolutionising the distribution of energy across the region. The goal? For the Greater Manchester region to become carbon neutral by 2038. 

What is the Heat Pump Pro tariff?

If you’ve ever had an Economy 7 tariff, or similar, you may already know what a “time-of-use” tariff is. It offers members lower electricity rates at a certain time of day. 

A “type-of-use” tariff, offers beneficial rates when using electricity for a specific purpose, rather than at a specific time. Electric car drivers may be familiar with our first “type-of-use” plan, Drive Anytime. This plan offers OVO members lower electricity rates when charging their EV.

So in the Heat Pump Pro tariff trial, participants will get 5p/kWh off their standard rate for electricity used to power their heat pump.

Simpler Energy + Heat Pump Pro

The Heat Pump Pro trial will be available for OVO members with a Daikin Heat Pump and smart meter, and who are also on our Simpler Energy price plan. Simpler Energy is our variable rate plan. This type of plan means electricity prices can go up or down, depending on the cost of wholesale energy. But prices always stay in line with the energy price cap, which is reviewed by energy regulator Ofgem

One advantage of being on a variable plan is there’s no fixed contract, just a rolling one – so you can switch tariff, or leave at any time, with no exit fees but you’d no longer be able to get the benefits of the Heat Pump Pro trial. 

All our plans give you 100% renewable electricity as standard1 and a tree planted for you, every year you’re with us2. Plus, you’ll get access to our free energy-saving tool, OVO Greenlight – which gives you personalised tips that can help you save energy at home.

How the Heat Pump Pro tariff works

OVO will connect your heat pump to its smart platform, and analyse the data we receive from it. This will help provide an in-depth understanding of how your central heating system behaves. 

That data lets us know exactly how much electricity the heat pump is using. This allows us to charge a different rate for general home energy use and the energy used by the heat pump. The difference will be credited back to the trialists’ next monthly bill. Here’s an example of how the credit is calculated:

In January a customer uses 900 kWh, of which 400 kWh was used by their heat pump, and 500 kWh went into other home uses. 

The unit price for their home energy is 20p/kWh, which means that their Heat Pump Pro rate is 15p/kWh.

During the first week of February, the customer’s bill will show the following:

Electricity used in January as £180 (900kWh at 20p/kWh)

We’ll credit the amount used by the heat pump (400kWh), which is  calculated as follows:

Credit (£) = (Household rate -Heat Pump rate) x energy used by Heat Pump

= (0.20 - 0.15) x 400

= £20

So the Heat Pump Pro credit is £20.

The future of the Heat Pump Pro trial

We are very excited about this innovative trial, as it aims to open up cheaper rates for heat pump owners all over the UK. At the moment, only Daikin heat pump owners3 living in a Northwards Housing Association property in Greater Manchester are eligible for this trial. But watch this space! 

OVO continues to participate in energy trials like this to help the nation progress to a low carbon future. 

If you’d like to stay up to date with heat pumps and other carbon cutting tech, then fill out this form and we’ll be in touch.

Sources and references:

1 100% of the renewable electricity we sell is backed by renewable certificates (Renewable Energy Guarantee of Origin certificates (REGOs)). See here for details on Renewable Energy Guarantee of Origin certificates and how these work. A proportion of the electricity we sell is also purchased directly from renewable generators in the UK.
2 Each year, OVO plants 1 tree for every member in partnership with the Woodland Trust. Trees absorb carbon dioxide from the atmosphere, so tree-planting helps to slow down climate change.

3 Daikin heat pump owners in the relevant region must have a smart meter to be eligible.