If you’re considering going solar, it likely means that you’ve taken a careful look at your utility bill. And if you haven’t, now is a good time to do so. Let’s discuss time-of-use billing and its connection to solar energy.
Understanding this pricing strategy employed by electricity companies can potentially result in significant savings on your bills, especially when combined with solar power.
What exactly is time-of-use billing?
Time-of-use billing is a pricing system used by utility companies.
Under time-of-use billing, the cost of electricity varies based on the time of day and time of year when it is consumed. This distinction underscores the importance for homeowners to not only monitor their energy usage but also be aware of when it is being consumed.
According to ADT Solar, time-of-use billing is gaining popularity as a billing method. This is because consumers can save money by using more electricity during off-peak hours.
How does time-of-use billing function?
If your electricity provider employs time-of-use billing, it will typically divide the day into two main categories: off-peak and on-peak hours.
During off-peak hours, when the demand for power is lower, electricity costs are cheaper. Conversely, during on-peak hours, when demand is typically higher, electricity tends to be more expensive.
The hours designated as off-peak and on-peak can vary between weekdays and weekends, and even change depending on the season.
How time-of-use rates vary throughout the day
The time-of-use rate schedule is designed based on the typical daily patterns of electricity users.
Let’s consider the example of Pedernales Electric Cooperative’s rates. Pedernales has categorized its rates into summer and non-summer periods. It has also divided the day into specific categories such as super economy, economy, normal, peak, and super peak.
This schedule takes into consideration the usual weekday routine for an average American household. The peak hours are typically from 5 am to 8 am when consumers tend to wake up and use electricity the most. Anything before 5 am is considered off-peak as most people are expected to be asleep and not using electricity.
During the morning hours, when people are preparing for work, the rates are in the normal range. From 8:01 am to 4:00 pm, the rates go back to off-peak costs as it is assumed that people are not home and not using much energy.
After 4:01 pm, the cost of electricity increases significantly as it is anticipated that people are at home and will be using a large amount of electricity.
In the summer, the super peak hours (2:01 pm to 6 pm) have the highest rate per kilowatt-hour, whereas the early mornings during summer have the lowest rate. This means that using electricity during super peak hours is the most expensive.
The time-of-use rates are designed to align with the demand for electricity based on consumers’ needs.
Do I have fixed rate billing or time-of-use billing?
Understanding if you’re on a time-of-use rate is important in order to determine the cost of your electricity usage. While some people may assume there is a fixed rate for electricity, this is not the case for everyone. Knowing your specific electricity rates can be helpful if you want to reduce your bill.
Wondering how to identify if you’re on a time-of-use rate? Do the following steps:
1. Check if your bill explicitly states the type of rate you’re on.
2. Examine the cost calculations. Are you being billed different amounts for energy consumption? If these rates vary based on different times, it’s likely you’re on a time-of-use rate system. Conversely, if you’re charged a single amount, it may indicate a fixed rate system.
To learn more about determining your utility rates, consult your electric company to understand the exact cost of your energy consumption.
How do solar panels work in conjunction with time-of-use billing?
Solar panels can be a cost-effective solution when paired with time-of-use billing. This is particularly true if your solar panels are combined with a solar battery backup.
By incorporating a solar battery into your home solar system, you can optimize your energy consumption and potentially reduce your electricity bill. Time-of-use rates account for the fact that you will be home and consuming energy in the evening, which is why rates are higher during peak hours.
Having a solar battery as part of your solar system allows you to collect energy from solar panels during the day and store it for later use. This way, you can rely on the electricity stored in the battery to power your home in the evening instead of using electricity from the power grid. As a result, you can avoid high time-of-use rates.
In addition, be aware that south-facing solar panels capture the maximum amount of sunlight during peak hours. By orienting your panels to the south, you can maximize your energy savings.