A small independent energy firm has launched the UK’s first variable electricity tariff, promising households significantly lower bills if they avoid using power at peak hours and run their appliances overnight.

For years energy experts have suggested that smart tariffs, which price electricity according to the time of day, are the future, as they could help smooth out the peaks in demand currently faced by the National Grid. This week, Hertfordshire-based Green Energy UK launched its Tide tariff which offers exactly that. Initially only available to households in England, the Tide dual-fuel tariff offers three different prices of electricity depending on the time of day.

Most standard households pay the same for their electricity whether they use it at 3am or 6pm – around 10p-14p per kWh. But if the price for electricity was just 5p at night but 25p during the peak hours of 4pm-7pm, would you change your behaviour? Tide will charge users 4.99p per kWh from 11pm-6am, 11.99p from 6am-4pm, 24.99p from 4pm-7pm, and 11.99p from 7pm-11pm.

So-called “time-of-use” tariffs are expected to become widespread as households are fitted with smart meters, which for the first time allow power companies to bill customers at different rates depending on the time of day.

Many readers will already be familiar with the Economy 7 tariff, which offers cut-price electricity at night. British Gas last year launched a simpler version of this, the FreeTime tariff, which offers free energy between 9am and 5pm on Saturday or Sunday. Early indications show consumers have saved £60 a year by taking advantage of this.

The time-of-use tariffs will particularly favour those with an electric car who charge it overnight, shift workers and insomniacs. Those with electric cookers who prepare peak-time meals should look elsewhere.

Crucially, you’ll need a free smart meter installed if you want to sign up. If you don’t already have a compatible one, Green Energy will send someone to install one. You also have to take the company’s 100% green gas supply which is charged at one rate irrespective of the time the gas is consumed.

Doug Stewart, Green Energy UK’s chief executive, says: “Our tariff is the smart way customers can bring down their bill, not trying to find the cheapest deal with a new-on-the-block supplier. The introduction of a time-of-day tariff is the first step into a new world of energy infrastructure; a step which lets customers decide when they use energy and what that means to their bill.”

The company, which has been supplying green energy for more than 15 years but only has 20,000 customers, claims consumers will be able to save £60 a year with moderate behavioural changes. But the big question is how much consumers can do this. Are you (or your neighbours if the walls are thin) happy to run your washing machine or dishwasher at night? Can you put off the ironing until 11pm? Could you really vac your house in the early hours?

Mark Todd of comparison website Energyhelpline.com agrees, saying it will be very difficult for consumers to work out whether the tariff will save them money. This is because the final bill will depend on so many variables – not least how much the user is prepared to change their habits. “My gut reaction is that it may be cheaper than the big six supplier’s standard tariffs, but it is unlikely to beat the very cheapest deals – unless, that is, you are prepared to spend all night washing your clothes, and running the dishwasher. It is also a variable tariff, which sounds alarm bells as you could get hit by a price rise soon.”

Green Energy UK hopes that people will be swayed by the fact its electricity comes from greener combined heat and power (CHP) units, meaning it produces around a third of the CO2 per kWh of standard electricity. This makes it greener than most, but not the 100% renewable power offered by some rivals. Its green gas, which costs 3.59p per unit and is sourced from anaerobic digestion plants, is cheaper than British Gas’s standard tariff (3.79p), but more expensive than the cheapest non-green suppliers that top the tables (typical 2.8p).

Martin Lewis of Money Saving Expert says: “If you are a medium to heavy user who uses far more electricity than gas, and you could shift your usage overnight, then this will be a winner.”

What you can save

Before you set the alarm to start the ironing at 5am, you might want to consider the relative costs.

An hour’s ironing typically uses 1 kWh of electricity, which will cost around 5p on Green Energy’s night-time price, 11p during the day or 25p during the 4pm-6pm peak. Those opting to run a standard older model washing machine on this tariff will bring the cost down from 22p during the day to 10p a cycle if they run it after 11pm. A dishwasher cycle at 65C will cost around 7.5p at night, 16.5p at midday or 37p if run at the peak time.

Running an older dishwasher every night for 50 weeks would save £31.50 a year compared to running it during the day on this tariff. An older washing machine run three times a week at night would save £15 a year. However, if you have one of the latest A+++ rated washing or dishwashing machines that use much less power, you reduce those savings by half.

The biggest savings come when charging an electric car. A 30kW recharge will cost £1.50 at night or £3.30 during the day – a £40 annual saving.

‘Safety first’ says the fire brigade

Is it safe – and/or fair on the neighbours – to run a dishwasher and other appliances at night? Many people admit to putting on the dishwasher before going to bed, and who hasn’t left the house while the washing machine runs? But a spate of tumble drier fires has pushed the matter centre stage in recent months. The London Fire Brigade told the Guardian that it attends a fire that can be traced to white goods of some sort on a daily basis. As a result it advises people not to leave them unattended overnight.

“We understand a balance needs to be struck between energy use, green issues and fuel costs, but in our view you can’t put a price on fire safety. If a fire breaks out during the night, whatever the cause, the risk to life is always greater as it is very likely people will be asleep and have less time to react and escape,” an LFB spokesman says.

Dave Green, Fire Brigades Union national officer, says: “Fires in the home at night can go unnoticed for far longer, and can therefore spread more rapidly. We always advise the public to turn off electrical products that are not being used. In particular tumble dryers that have been blamed for a number of fatal fires over the past few years.”

The most recent assessment of fire statistics was published by the government in June 2014, and shows that the most common time for fires to be reported is 8pm-9pm (the one-hour period accounting for 9% of all fires). While only 11% of fires occurred in the five hours between midnight and 5am, these caused a fifth of all deaths in Great Britain in 2013-14. In that period, fire brigades were called to 39,600 dwelling fires. Smokers caused the largest share of deaths in accidental dwelling fires (37%), while cooking appliances are the source of more than half of accidental fires. Electrical appliances account for 12% of fires in homes.