Variable Rate Tariff vs Fixed Rate for Heat Pumps
Variable time-of-use tariffs save heat pump owners £100-200 more per year than the best fixed deals. The trade-off is price certainty versus maximum savings. For most heat pump owners, the variable route wins — but there are valid reasons to choose fixed.
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The Key Differences
| Feature | Variable (e.g., Octopus Cosy) | Fixed (e.g., 12-month deal) |
|---|---|---|
| Rate changes | Can change quarterly | Locked for contract term |
| Off-peak rates | Yes — 10p/kWh windows | No — flat rate all day |
| Exit fees | None | £25-50 per fuel |
| Price protection | Ofgem cap limits standard rate | Rate guaranteed for term |
| Best annual cost (4,000 kWh) | ~£600 (Cosy) | ~£800 (best fixed) |
Which Is Better for Heat Pumps?
For most heat pump owners, a variable time-of-use tariff like Octopus Cosy delivers the lowest costs because it offers off-peak rates that fixed tariffs cannot match. The ability to shift 60%+ of heat pump electricity to 10p/kWh windows creates savings that no flat fixed rate can compete with.
The key question is whether you can actually schedule your heating around off-peak windows. If you can, go variable. If you cannot or will not, a fixed rate like Scottish Power SmartGen provides guaranteed savings over a standard tariff with zero scheduling effort.
When Fixed Makes Sense
- Poor insulation: If your home cannot hold heat between off-peak windows, variable peak rates eat into savings
- Budget certainty: If you need predictable monthly bills for financial planning
- Rising market: If you believe wholesale prices will rise significantly, locking in a competitive rate protects you
- No scheduling willingness: If you will not adjust your heating schedule, a fixed reduced rate like SmartGen is simpler
See our full tariff guide and comparison table for all options.
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Frequently Asked Questions
Is variable or fixed better for heat pump owners?
Variable time-of-use tariffs deliver the lowest costs for most heat pump owners because of cheap off-peak rates. Fixed tariffs provide certainty but cost £100-200 more per year.
Can I switch from fixed to variable without penalty?
Fixed tariffs typically have exit fees (£25-50). Variable tariffs have no exit fees. Check your contract terms before switching.
What if electricity prices rise on a variable tariff?
The Ofgem cap limits standard rates. Off-peak rates on dedicated heat pump tariffs have historically remained well below cap. See our electricity price rise guide for more detail.
Is Scottish Power SmartGen fixed or variable?
Scottish Power SmartGen is typically a 12-month fixed deal, combining reduced rate with price protection.
Tariff Strategy for Heat Pump Owners
The variable vs fixed decision is one part of a broader cost optimisation strategy. Combined with insulation, solar panels, and the Boiler Upgrade Scheme, the right tariff choice helps make heat pump running costs competitive with or below gas heating — the tipping point for mainstream adoption of heat pump systems.