What Are Time-of-Use Rates?
Time-of-use (TOU) electricity pricing charges different rates depending on when you use electricity. Peak hours (typically 4–9 PM) cost significantly more than off-peak hours (late night to early morning). TOU rates are becoming the default billing structure in many states, particularly California, Arizona, and Connecticut.
Typical TOU Rate Structures
| Period | Hours | Rate (Example) | Multiplier |
|---|---|---|---|
| Off-peak | 12 AM – 7 AM | $0.12/kWh | 1.0x |
| Mid-peak | 7 AM – 4 PM | $0.22/kWh | 1.8x |
| Peak | 4 PM – 9 PM | $0.38/kWh | 3.2x |
| Super off-peak | Varies (seasonal) | $0.08/kWh | 0.7x |
The spread between off-peak and peak can be $0.15–$0.30/kWh — a 200–400% difference. This spread creates opportunities and challenges for solar homeowners.
How TOU Rates Affect Solar Without a Battery
The Timing Mismatch
Solar panels produce most electricity from 9 AM to 3 PM (mid-peak hours), while peak rates occur from 4–9 PM when the sun is low or set. Without a battery, your solar exports earn mid-peak credits, but you still buy expensive peak electricity in the evening. This mismatch reduces the effective value of solar on TOU plans compared to flat-rate plans.
Impact on Solar Economics
Under flat-rate billing at $0.20/kWh, every kWh of solar production saves $0.20. Under TOU billing, daytime solar production saves only the mid-peak rate ($0.22/kWh) while you still pay the peak rate ($0.38/kWh) in the evening. The net savings per kWh of solar generation is lower without a storage strategy.
Solar + Battery: The TOU Arbitrage Strategy
A battery changes the equation entirely. Instead of exporting solar at mid-peak rates, you store daytime solar and discharge it during peak hours. This shifts your solar's value from mid-peak ($0.22) to peak ($0.38) — an increase of $0.16/kWh for every stored kilowatt-hour.
Annual Savings from TOU Arbitrage
| Battery Size | Daily Cycle (kWh) | TOU Spread | Annual Savings |
|---|---|---|---|
| 10 kWh | 9 kWh (usable) | $0.16 | $526 |
| 13.5 kWh | 12 kWh (usable) | $0.16 | $701 |
| 13.5 kWh | 12 kWh (usable) | $0.26 | $1,139 |
| 20 kWh | 18 kWh (usable) | $0.26 | $1,708 |
In aggressive TOU markets like California with $0.26+ peak-to-off-peak spreads, battery arbitrage alone can pay back the battery cost in 6–8 years.
Strategies to Maximize Solar Savings on TOU
1. Shift Consumption to Midday
Run dishwashers, laundry, pool pumps, and EV chargers during midday solar production hours. Smart home automation can schedule heavy loads during 10 AM–2 PM when solar output peaks.
2. Pre-Cool Your Home
Run AC aggressively during mid-peak hours (using solar power) to pre-cool your home before peak rates begin. A well-insulated home can coast through 2–3 hours of peak pricing on thermal inertia alone.
3. Smart EV Charging
Schedule EV charging for off-peak or midday solar hours. Avoid charging during peak evening hours. Many EVs and smart chargers support scheduled charging natively.
Should You Switch to TOU Rates?
If you have solar with battery storage, TOU rates typically increase your savings by allowing arbitrage. If you have solar without a battery, TOU may reduce your savings compared to a flat rate depending on the specific TOU structure. Run the numbers for your specific plan using our solar calculator, which models TOU scenarios.