If you’re interested in going solar, that means you might have taken a long, hard look at your utility bill. And if you haven’t, then maybe you should. Let’s chat about time-of-use (TOU) rates and solar.
Understanding this electricity company tactic could save you a good bit on your bills, especially when combined with solar.
In this blog, we’ll answer many of the questions you may have about the process that could be draining or saving you money. We’ll also cover why time-of-use rates can work really well with a set of solar panels.
What are time-of-use (TOU) rates?
Time-of-use, also known as TOU, rates are a pricing system used by utility companies. Under TOU rates, the amount of electricity you use has a different price depending on the time of day and the time of the year. This distinction means that homeowners should pay attention to not only how much energy their home is consuming, but when.
Time-of-use billing is a structure becoming more and more popular. It’s a means to encourage people to use their energy during more favorable times. Here are some of the benefits:
- The cost of power is cheaper during off-peak hours.
- There is less pressure for the power grid to meet the demand of its consumers.
- The demand for power is lower.
How do time-of-use rates work?
If your electricity provider uses TOU rates, they’ll typically break up the hours of the day into two distinct categories: off-peak and on-peak. During off-peak hours, the demand for power is lower and the cost for electricity is cheaper. When it’s on-peak hours, the demand is usually much higher and more costly. Off-peak and on-peak hours could change between weekend and weekdays, and even seasonally.
According to the U.S. Bureau of Labor Statistics, electricity prices have steadily been climbing every summer for the last 20 years. Your HVAC is partly to blame for that. It all comes down to how you heat and cool your home. The air conditioning unit in your home is most likely one of the biggest users of your electricity. For a better understanding, let’s take a closer look into a time-of-use rate schedule.
Time-of-use rate schedule
TOU rates are mirrored after the most common daily patterns of electricity users. Let’s take a look at Pedernales Electric Cooperative’s time-of-use rates, for example. They’ve divided their rates into summer and non-summer categories. Then, they’ve broken up the day to create a rate schedule of the following hours:
- super economy
- economy
- normal
- peak
- super peak
This schedule takes into account the typical weekday for an American household. Consumers wake up anywhere between 5am to 8am, which is why this time frame is often considered peak. Likewise, prior to 5am might be considered off-peak since it’s understood that most consumers are asleep and not using their electricity. Normal risers between these on-peak hours are busy consuming electricity to get ready and head off to work. The rates go back to off-peak costs from 8:01 a.m. to 4:00 p.m. because it’s expected that people aren’t home to use their energy.
Usage later than 4:01 p.m. sees a spike in the cost of electricity because this is when the electric company anticipates you being at home and accounting for the bulk of your usage. In the summer, super peak hours (between 2:01 p.m. and 6 p.m.) have the highest rate of $0.0886 per kilowatt-hour (kWh). Compare that to the lowest off-peak amount of $0.0303 per kWh during the early mornings in the summer. This means that using your electricity during this time is the most expensive. Ideally, time-of-use rates reflect the demand of electricity consumers’ needs.
See how figuring out the best times to use your electricity can work out for you?
How do I know if I’m on a TOU rate?
Many people assume there’s a fixed rate for the cost of electricity. While that might be true for some, it isn’t for all. Knowing where you stand on electricity rates is important for determining the cost you’re spending on electricity. This information could be useful if you want to lower your bill.
So, how do you know if you’re on a TOU rate? Well, let’s take a look at your bill. Or you can contact one of our Solar Energy Specialists, who will evaluate your electric bills during a free solar consultation. Until then, here a few of the easier steps you can take to determine your rate:
- Find if your bill tells you outright what kind of rate you’re on. Your utility bill could take the guesswork out of it entirely. While naming your rate could be useful, you’ll still want to get clear details on how much you’re paying for your electricity.
- Take a look at the cost calculations. Are you being charged different amounts for energy consumption? If these rates are for different times, you could be on a time-of-use rate system. And if you’re only being charged one amount, you could be on a fixed rate system.
For more information on determining your utility rates, go to your specific electric company and find out exactly how much you’re paying for the energy you consume.
How do time of use rates work with solar?
Solar panels, along with a solar battery backup, can be even more budget-friendly tools when combined with TOU rates. If you don’t know, solar panels are a great way to generate clean electricity in abundance.
Solar panel systems capture the most sunlight when the sun is highest in the sky. And without a solar battery, you might not be making the best use of it. During the day (when you’re most likely not home), TOU rates are cheaper and pulling electricity from the power grid isn’t as expensive as later in the day (when you are home). If you have a solar battery though, you can hang onto that unused solar energy until later. In the evening, TOU rates are more expensive and it’s probably more cost-effective to use your stored solar energy.
In states like California, homeowners with solar also have TOU rates that align with a local net metering policy. Let’s look at how you can use TOU rates to work well with solar panels and a solar battery.
Capturing the most sunlight with your solar panels
Have you ever wondered why it’s recommended that your solar panels face a certain direction? South-facing solar panels catch the optimal amount of sunlight during the sun’s peak hours. This usually depends on your exact location and the amount of shade your home typically experiences. But it’s the best way you can make sure your solar panels are getting the most sunlight when the sun is highest in the sky.
If you’ve been paying attention to the TOU rates above, this means that your solar panels can capture the most sunlight when you’re at work and during off-peak hours. Keep reading to find out how this could be beneficial to you.
Using solar batteries to save
Adding a solar battery to your home solar system, like one of Enphase’s IQ Batteries, could optimize the way you’ve been consuming energy and help out with your electric bill. TOU rates take into account that you’ll be home and using your energy in the evening. That’s why rates are pricier during peak hours.
If you have a solar battery included in your solar system, you could maximize the amount of energy your solar panels collect midday and store it for later. So, make sure your solar battery is fully charged! Then, in the evening, you can power your home with the electricity from the solar battery, instead of the power grid. This not only offsets some of the demand from consuming at an on-peak time, but helps you successfully evade high TOU rates.
For more information about how you can save with TOU rates, contact a Solar Energy Specialist today!
