Extracting meaningful cost savings from your solar investment involves more than simply generating power; it also demands an understanding of how utility rate structures, such as time-of-use (TOU) rates, can impact overall savings potential. TOU rates can lead to substantial savings by allowing solar system owners to strategically manage their energy consumption. In this blog, we will explore what TOU rates are, how they function, their benefits for solar owners, and strategies for optimizing savings in ETB Developer.
What are Time-of-Use Rates?
Time-of-use (TOU) rates are a pricing structure set by utility companies, where the cost of electricity varies depending on the time of day, day of the week, and even the season. With TOU rates, electricity costs are highest during peak hours—typically late afternoon to early evening when demand is greatest. Rates decrease during off-peak hours, such as late at night or early in the morning when electricity demand is lower. Some plans also include mid-peak rates for periods of moderate demand. The goal of TOU rates is to encourage energy use during off-peak hours when demand on the grid is lower, promoting efficiency and alleviating strain on the grid.
For some utilities, customers are required to voluntarily opt-in to TOU riders or switch rate schedules to a TOU rate plan, while other utilities have TOU rate schedules as their default rate plans. More and more utilities are offering TOU rate plans because these plans are more closely aligned to actual energy costs throughout the day than flat-rate plans are.
Benefits of Time-of-Use Rates
There are a few factors that determine how beneficial TOU rates can be: the timing of the TOU periods, the price differential between the periods, energy consumption patterns, and whether an energy storage system (ESS) is connected. Based on this, TOU rates can either improve or hinder the savings that solar system owners experience.
TOU rates present an opportunity to optimize savings by managing energy use strategically. Solar panels generate the highest amount of electricity during midday when the sun is strongest. If peak TOU rates align with solar generation times, users can rely on their solar power instead of drawing from the grid during these costly periods, leading to greater savings.
The price differential between TOU periods is another important factor that affects how beneficial TOU rates can be. The difference between peak and off-peak rates should be significant enough to encourage consumers to shift their energy loads from the peak period to off-peak. If the price difference is minimal, the potential savings may not justify the effort needed to change consumption habits. Shifting energy-intensive activities like running appliances or charging electric vehicles to off-peak hours is another effective way to take advantage of TOU rates. Reducing your electricity expenses requires a bit of strategy and planning like scheduling certain tasks for when grid rates are less expensive or when solar production is lower.
Effective Strategies for Maximizing Time-of-Use Savings
Combining solar with an ESS can also increase savings. Using an intelligent energy management system technology like ETB Controller, you can store excess solar energy that was generated during peak sunlight hours and later use the energy during costly peak demand periods to avoid dependence on the grid, called Time-Of-Use Arbitrage. This helps to minimize costs while maximizing returns for solar panels and energy storage systems. To capitalize on TOU rates, solar panel owners should closely monitor their energy consumption patterns by using tools like smart meters and energy monitoring systems like ETB Monitor to analyze the time and reasons why energy is used.
Our ETB Controller is deployed at the sites below, all utilizing the EMS application of TOU arbitrage. Learn more at the following links:
Our team understands time of use rates can be complex. We have a team of experts dedicated to assisting our users with rate understanding and modeling in ETB Developer. Set up a call here to discuss more, or learn more about ETB Controller. You can always start a free 14-day trial of ETB Developer to start modeling these rates and scenarios.
