June 16, 2025, 10:35 am | Read time: 4 minutes
Depending on the current developments at the electricity exchange, the price for energy rises or falls. Dynamic tariffs take advantage of this price range. Now, a new provider, Tado, has entered the market. myHOMEBOOK took a closer look at the tariff and consulted an expert.
During times when the sun shines a lot or the wind blows more, electricity on the energy market is cheaper. This is because more solar energy or wind power can be generated in these cases. Experts refer to this as “dynamic electricity tariffs.” A new player in this sector is the Munich-based company Tado, which has so far focused on energy management solutions for households. Now, Tado is offering a dynamic electricity tariff starting May 7, 2024, which, according to their own statement, could offer up to 35 percent savings. myHOMEBOOK asked an energy expert who might benefit from Tado’s hourly tariff.
How Does a Dynamic Electricity Tariff Work?
Dynamic electricity tariffs are relatively new to the market. Tado is among the pioneers in this area. Starting in 2025, all major energy providers in Germany are expected to offer this type of tariff. The key: With their own energy management software, households can shift their electricity consumption to times when a lot of solar and wind energy is available. This is when it is particularly cheap on the European electricity exchange. According to Tado, savings of up to 35 percent are possible through “the automatic shifting of their energy consumption to cheaper hours.” Additionally, the electricity is entirely sourced from renewable energies.
“For the first time, end customers can benefit from price fluctuations. They receive an hourly precise billing instead of paying an average electricity price to their energy provider,” explains Philip Beckmann, CEO of Tado. Pricing is done on an hourly basis. Tado purchases the electricity hourly on the exchange through its subsidiary “Awattar.” Awattar was acquired by Tado in 2022.
Dynamic Electricity Tariffs
“Dynamic tariffs are currently a hot topic,” says Holger Schneidewindt, an energy law expert at the Consumer Center of North Rhine-Westphalia. “The tariffs are linked to the wholesale energy market. Prices here are very volatile,” the expert explains in response to a myHOMEBOOK inquiry. These are traded either in quarter-hour or hourly intervals. “Prices can go up and down,” says Schneidewindt.
What Does the Tariff Cost?
Tado passes the exchange prices directly to customers. In addition, there are network charges, taxes, and other fees. There is also a surcharge of 1.785 cents per kilowatt-hour for the green electricity certificate–since Tado’s energy comes from renewable sources. Tado also charges a monthly fee of 4.58 euros. Customers can cancel the tariff monthly. If the electricity price is negative due to an energy surplus, customers even receive money back for charging their electric car or operating their heat pump, according to the provider.
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Who Benefits from the Tariff?
Customers who can adjust a large part of their consumption–hourly and in real-time–can benefit from the flexible pricing. Households that control heating and hot water via a heat pump or charge their electric car at their own wallbox can determine when the storage or car is charged. The price is then based on this. On average, according to Tado, you can save around 300 euros per year on an electric car and 430 euros on a heat pump.
“It’s not easy to understand dynamic tariffs,” explains energy expert Schneidewindt. He recommends reviewing the terms and conditions before signing a contract. “You only sign something like this once you understand it.” It is also always a “bet on the future,” as Schneidewindt summarizes. No one can predict developments in the energy sector. “If prices shoot up, you’re stuck,” warns the expert.
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The Catch with the Tado Tariff
However, there is a catch with dynamic tariffs–at least at the current time. “In Germany, we need a high-tech smart meter for this,” says Schneidewindt. This costs extra money, and you have to get one first. “Without it, nothing will work.”
Also interesting: Tado CEO on the Expansion of Smart Meters in Germany: “A Total Disgrace!”
Smart meters are intelligent electricity meters that are currently being introduced and are expected to become mandatory by 2025. “Such a meter can be requested from the local network operator or regional utility companies,” says Tado. In some regions, a meter exchange is also free of charge. Until the meter is exchanged, a tariff that dynamically adjusts to the electricity exchange monthly applies. Whether Tado would also install a smart meter–and especially at what price–is currently unknown. “Regarding the installation of smart meters, we are currently exploring various options,” explains a Tado spokesperson. This would include partnerships with smart meter providers.