Time of Use Rate Plans

Traditionally, your electricity usage is calculated in kilowatt-hours (kWh) and you are billed monthly. The more energy you use, the more you pay—well, not with a time-of-use (TOU) rate plan. Let’s see how a TOU rate plan and a solar or solar-battery system can work together to save you money on your electric bill.

What Is a Time of Use Rate Plan?

With a time-of-use (TOU) plan, rates change based on the day of the week, time of day, and season. When demand is high, you are charged more per kWh used. High-demand (or peak) times are typically evenings, holidays and weekends, when people are at home using more electricity. These plans are popular because they encourage a more evenly distributed electricity use load, encourage the use of solar, battery, and solar-battery systems, and sometimes are financially beneficial for electricity providers.

Why Are TOU Rate Plans Beneficial for Solar Customers?

Solar energy is produced during daylight hours when most people are at work. That electricity can be sold back to the grid at a highly discounted rate or stored for later use via a home battery. The rate that the electricity provider pays you for your energy can change too, so surplus solar electricity you generate during off-peak hours gets purchased at lower off-peak rates.

Most people use more electricity in the evening hours when they get home from work. The AC is cranking, the oven is going, the lights are on and your devices are charging. A solar-battery customer who has stored up surplus electricity generated during the day can use it during this time of high need and high cost, resulting in substantial savings.

Even if you do not have a battery, a TOU plan can be helpful for people who do not work or who work hours other than the usual 8 a.m. to 5 p.m. shift. Add in a solar system to save even more.