Not-for-profit energy provider Ebico has launched a tariff that offers Economy 7 users 'free' electricity at night - but don't assume the word 'free' means this will be the cheapest tariff for you.

The supplier, which has around 60,000 customers, today launched the unique electricity-only tariff. It charges 0p per kilowatt hour at night, effectively giving you free electricity during the seven off-peak hours on Economy 7 - though there is a daily standing charge to pay.

There's also a fair-use policy which means you can only use a maximum of 60% of your monthly electricity use in off-peak hours. If you're not sure how much you currently use at night, see our Economy 7 guide for how to check.

Based on typical use, the tariff costs an average of £77 a year more than the cheapest in the market. Yet this assumes you only use 42% of your electricity at night, when the rate's cheap. So if you can use more than this, then this tariff could be among your cheapest Economy 7 deals, depending on your region and usage.

Prices vary by usage and region, so to see how it works do a comparison with our Cheap Energy Club.

What is Economy 7?

Economy 7 offers cheaper electricity at night, but charges a higher rate during the day. You get the cheap rate for a period of seven hours, usually between midnight and 7am.

It's mainly intended for people with storage heaters which draw electricity in the evening or overnight, then release heat in the day when needed.

For more information, see our Economy 7 guide.

How does Night Owl work?

It works like any other Economy 7 tariff, you just won't be charged for any electricity you use during your night hours - though there is a standing charge and a day rate.

To get it you'll need to have a smart meter installed. If you already have one and it's not able to send automatic reads to Ebico once you switch, or you can't get one for technical reasons (such as poor signal), you're still able to get this tariff - but you'll be required to give monthly meter readings.

The smart meters will help you keep track of how much you're using at night, showing you day and night usage in near real-time on your in-home display - a small wireless gadget that you'll be offered alongside the meter.

Here are the other need-to-knows:

  • It's an electricity-only tariff.
  • It's fixed for 12 months.
  • There is a £30 exit fee.
  • You'll need to pay by direct debit, either monthly or quarterly.

The tariff is available direct from Ebico or via price comparisons sites - including our Cheap Energy Club.

How does it stack up?

Though there's no charge per unit of electricity, there is a fairly high standing charge and a day rate, so it only beats the cheapest tariff - from new provider OneSelect - if you're on, or very near, the 60% fair-use threshold, based on typical use.

Compared to the average big six standard tariff, it's just over £100/yr cheaper for a typical user.

However, as prices will vary by your region, actual usage and your exact split between day and night use, it could be worth doing a comparison on Cheap Energy Club.

Average annual cost – dual fuel(i)

Usage Big six average Cheapest (ii) Ebico 'Night Owl'
42% usage off-peak (GB average) £713 £534 £611
45% usage off-peak £698 £527 £588
50% usage off-peak £674 £514 £550
55% usage off-peak £643 £502 £512
60% usage off-peak £624 £489 £474
(i) This table is based on Ofgem typical usage figures of 4,200 kWh. (ii) Only available in England and Wales.

What happens if I use more than 60% at night?

Ebico told us that it can move customers onto another tariff if monthly off-peak electricity usage exceeds the 60% monthly fair use policy - thought it doesn't necessarily mean it will.

It added that should it need to move you, you'd get advanced notice and you wouldn't have to pay any exit fees, so you could switch away.

Ebico CEO, Phil Levermore, said: "For households without a mains gas supply, night storage heaters can be a convenient way of heating the home. In practice, however, winter fuel bills with this form of heating can come as a nasty shock – particularly if it turns-out to be a very cold winter. As a result, electrically-heated homes are 70% more likely to be in fuel poverty, and that fuel poverty to be 70% deeper, than homes heated with mains gas.

"Night Owl offers winter peace of mind to households using Economy 7 heaters."