More than 5 million US homes now have solar panels. As energy bills rise and we become increasingly eco-conscious, more and more people are investigating solar installations. One of the main reasons why solar has become more popular is the opportunity to save money. There are several factors that influence costs, including the time-of-use (TOU) rate. The TOU rate relates to tariffs at different times of day. During peak hours, rates are higher than during off-peak hours. By decreasing consumption when prices are highest, you can lower bills.
In this guide, we’ll discuss the relationship between energy bills and time-of-use rates and share tips to help you maximize solar savings.
What is TOU Billing?
TOU billing governs the rate of electricity at different times of day. Under TOU structures, prices are higher during peak periods when the demand for electricity surges. During off-peak hours, when the demand falls, prices are lower. Understanding how time-of-use rates work can help you lower energy bills and maximize solar energy savings.
Solar and Time-of-Use Rates
Solar panels generate electricity using power from the sun. If you’re thinking about installing solar panels at your home or business premises, it’s natural to have questions about how much you could save and how quickly you can benefit from your investment. Multiple factors influence these figures, including:
- Your average energy consumption
- Your consumption behaviors
- The size of the property and the solar installation
- Whether you have battery storage
- Weather conditions
- How much sunlight your solar panels capture
The way you consume energy is key to calculating potential savings. When you use energy and how much you use play a pivotal role. If you’re figuring out savings with solar installations, it’s crucial to understand the effects of time-of-use rates.
If electricity rates are higher during the evening, it’s beneficial to reduce consumption and/or utilize battery storage to enable you to capitalize on lower rates during the day. Generally TOU rates are low during the day and higher during the evenings, this does not align with peak solar energy production that generally reaches its maximum output during the middle of the day. If you have battery storage, you can use stored energy from solar later during peak hours to reduce reliance on the grid and lower bills.
Another key point is price advantages for solar customers who export excess energy to the grid. Net billing and net metering enable customers who generate more energy than they consume to benefit from credits. The rates vary. Credits for net metering usually reflect the rate you pay for electricity. Credits for net billing are usually similar to wholesale energy rates, meaning they are often lower than retail prices.
How to Maximize Solar Savings by Understanding TOU Rates
Solar savings is a term used to describe reductions in electricity costs when you generate your own power rather than relying on the grid. When you calculate solar savings, it’s important to include any relevant incentives and credits for exporting excess energy.
Understanding TOU rates is critical for maximizing solar savings. If you are aware of peak and off-peak periods and tariffs, you can adapt the way you use energy and moderate consumption to increase savings and lower bills. You can also enhance the value of credits you receive from exporting excess energy.
Simple steps can make a big difference. These include:
1. Evaluating production: Peak vs. off-peak
When you’re working out cost savings, you’ll need to consider peak and off-peak tariffs, but also peak vs. off-peak solar production. This relates to how much energy your solar system produces at different times of day. In many cases, peak production occurs during the day, around midday. If you produce large amounts of energy during off-peak periods, when tariffs are lower due to low demand, your savings may not be as significant. There are ways to get around this, including modifying your energy consumption habits and storing energy using solar batteries.
2. Shifting energy consumption
One of the best ways to save money and optimize solar savings is to shift energy usage. By changing when you use the most energy, you can benefit from cheaper rates during off-peak periods. Maximizing consumption when rates are lowest enables you to use solar power more efficiently and reduce reliance on the grid. Things such as running laundry machine and charging EV at night during off-peak periods are some of the easiest and simplest ways to shift energy consumption and benefit from lower energy rates. With the new smart technology such as smart relays and smart electrical panels you can create custom schedules to automatically run your loads at the most advantageous times with no manual intervention.
3. Consider battery storage
Investing in solar battery storage enables you to store energy. There are several benefits, including accessing a reliable power supply, reducing your reliance on the grid, and using stored energy during peak periods. Batteries are an effective way to save money when analyzing the impact of time-of-use rates. If you have stored energy, you can access supplies during peak periods when rates are highest.
4. Research export credits
Some time-of-use rates allow solar customers to export excess energy in exchange for higher credits as well. If you generate more power than you use, you can maximize savings by exporting during peak-hours and also receiving bigger credits. Export at the peak tariff rate periods is the time when the electricity is most valuable to your utility company.
5. Optimizing solar production
Designing for optimal solar production during peak hours can help you increase the amount of energy you generate. Working with an experienced, reputable solar panel installation company is important for ensuring the highest levels of performance. Choosing where to fit the panels, finding the best system for your home or business, and getting the orientation just right can help you increase savings.
When are Peak and Off-Peak Hours?
Typically, peak hours lie within daytime or evening hours on weekdays when the demand for energy is the highest. Off-peak rates usually apply during weekends and overnight when the demand is lower. You can check local tariffs online using the Utility Rate Database.
Conclusion
Time-of-use (TOU) rates dictate energy prices at different times of day. During peak hours, when demand increases, prices rise. During off-peak periods, when the demand falls, rates are lower. Understanding TOU rates is beneficial for all customers, as it can help them adjust usage in line with pricing structures. If you increase usage during off-peak periods and reduce consumption during peak times, you can bring bills down. If you have solar panels, it’s important to understand how to maximize savings. To increase savings, it’s advantageous to optimize production, store excess energy for use during peak hours, research credits for exported energy, and shift usage. If you have solar battery storage, you can reduce reliance on the grid, gain credits by exporting power and lower consumption during peak periods.
If you have any questions about time-of-use rates, or you need advice about calculating costs or figuring out potential savings, don’t hesitate to contact the experienced, knowledgeable Wolf River Electric team.
