As we step into 2025, it's important to stay ahead of the curve when it comes to managing energy costs. One concept every homeowner should understand is Time-of-Use (TOU) rates—a pricing structure that determines how much you pay for electricity based on when you use it. With TOU rates becoming more common, solar + battery storage is now more valuable than ever.
What Do Rush Hour Traffic and Electricity Have in Common?
Think about your daily commute. If you leave for work at 8AM, you’ll likely hit heavy traffic, making the trip longer and more stressful. But if you leave earlier or later, the roads are clearer, and you get to your destination faster and with less hassle.
Electricity works the same way. Just like roads are busiest at certain times, energy demand spikes in the evening when people return home, cook dinner, and turn on appliances. To manage this demand, utility companies charge higher rates during peak hours (like rush hour) and lower rates when demand is lower (like late at night or mid-day).
Understanding Time-of-Use Rates
TOU rates vary based on two main factors:
- Time of Day – Electricity costs more during peak hours (typically late afternoon to evening) and less during off-peak hours (when demand is lower).
- Usage Tiers – Some utilities charge different rates based on how much electricity you use. Those who stay under a baseline limit may pay less than those who exceed it.
For example, California’s Pacific Gas and Electric (PG&E) adjusts rates throughout the day. The highest prices often occur between 4 PM and 9 PM, when everyone is using power at the same time.
Why Do Utilities Use TOU Pricing?
Electricity demand isn’t constant—it follows predictable patterns. Just like roads get congested during rush hour, the electrical grid gets overloaded when everyone is using power at once.
To encourage people to shift energy use to less busy times, utilities charge higher rates during peak hours and lower rates when demand is low. This helps balance electricity supply and demand while preventing power outages.
How Homeowners Can Save with TOU Rates
If you’re on a TOU rate plan, you can reduce your electricity costs by:
-Running appliances like dishwashers and washing machines during off-peak hours.
-Charging electric vehicles overnight when rates are lower.
-Investing in solar + battery storage to store excess energy during the day and use it when electricity prices spike in the evening.
Battery Storage: The Perfect Solution for TOU Rates
TOU rates can be frustrating for solar homeowners. Why?
Because solar panels generate the most electricity during the day—when rates are at their lowest. That means you might send energy back to the grid for a small credit, only to buy it back at a much higher price in the evening.
The solution? Battery storage.
With a home battery system, you can:
-Store excess solar energy during the day instead of sending it to the grid.
-Use that stored energy in the evening when rates are highest.
-Maximize your savings by avoiding expensive electricity costs.
The Power of Energy Arbitrage
Energy arbitrage is a strategy that allows homeowners to store low-cost energy and use it when prices are highest. Here’s how it works:
-Daytime – Solar panels power your home and charge your battery when rates are low.
-Early evening (5 PM) – You may still pull some electricity from the grid if it’s affordable.
-Peak hours (6-9 PM) – Instead of paying peak rates, you use stored energy from your battery.
This method can save homeowners thousands over time by reducing reliance on expensive evening electricity.
The Bottom Line
As TOU rates become more widespread, it’s more important than ever for homeowners to understand how to time their energy use and make the most of solar + storage.
-TOU rates charge different prices based on the time of day you use electricity.
-Battery storage lets you avoid high peak-hour costs by using stored solar power.
-Energy arbitrage maximizes savings by shifting power usage to off-peak hours.
Want to learn more about how solar and battery storage can cut your electricity costs? Reach out to one of our experts to see how much you can save!
