Time-of-Use Rates and Solar: How Timing Changes Your Savings

Time-of-use (TOU) rates charge more for electricity at some hours than others. The most expensive window is usually late afternoon and evening, when everyone gets home and solar output is fading. That timing mismatch means a TOU rate can shrink the value of solar if you do nothing, or grow it if you shift your usage and, in some cases, add a battery. The right answer depends on your utility’s export rules and your daily routine.

How time-of-use rates work

A TOU plan splits the day into periods, each with its own price per kWh:

• Peak: the highest price. In California’s big utilities, peak typically runs from 4 to 9 p.m.
• Off-peak: the lowest price, often overnight and sometimes midday.
• Partial-peak or shoulder: in between, on some plans.

Prices often change by season too, with higher summer peaks in hot climates. Some plans add critical peak pricing, where the utility can call a limited number of very expensive event days. Duke Energy’s Residential Solar Choice in North Carolina, for example, pairs TOU with critical peak pricing.

The details vary widely by utility. Always look up the exact plan by name.

Why solar timing matters under TOU

On a sunny day, a typical south-facing system ramps up in the morning, peaks around midday and drops off by late afternoon. On most TOU plans, that means:

• Most solar power is made during cheaper hours.
• Your highest-priced hours come after the sun’s best production.

What that means for your bill depends on how your utility credits exports.

Under full retail net metering with TOU

If exports are credited at the TOU price for the hour they’re exported, then midday exports earn the lower midday price, and evening imports cost the higher peak price. A kWh exported at noon may only cover part of a kWh bought at 7 p.m.

That’s a quiet reduction in value compared with a flat-rate plan. Some homeowners do better staying on a flat rate if their utility allows it. Others do better on TOU, especially if their peak window overlaps well with solar production. You need to model it.

Under net billing or avoided-cost rules

When exports earn a low fixed or hourly rate, as in California, Arizona, Utah or Idaho Power territory, the TOU structure mostly matters for what you import. Your goal becomes simple: use as much solar as possible yourself, and avoid buying power at peak prices. See net metering explained for how these export rules differ.

Hawaii is an interesting case. Hawaiian Electric’s Smart DER tariff pays different export rates by time of day. On Oahu, as of our research, it pays about 13.5 cents midday, 18.9 cents overnight and 32.9 cents during the 5 to 9 p.m. peak. That’s why most new Hawaii systems include batteries: power stored at midday is worth more than twice as much in the evening.

Step one: shift what you can

Before spending money on equipment, move flexible usage into sunny hours. This costs nothing and works under any export rule.

Load	Easy shift
Dishwasher	Run on a delay timer to start late morning
Laundry (washer and dryer)	Midday on weekends or work-from-home days
Electric water heater	Timer or smart controller to heat midday
Heat pump water heater	Many have scheduling modes to heat during solar hours
Pool pump	Run during daylight, not overnight
EV charging	Charge midday when the car is home; otherwise pick the cheapest off-peak hours
Air conditioning	Pre-cool the house in early afternoon, then let the thermostat drift up during peak

Pre-cooling deserves a note. Cooling a house a few degrees below your usual setting in the early afternoon uses solar power to “store” coolness in the building, which can cut AC use during the expensive evening window.

For more ways to cut usage, see efficiency before solar. An energy monitor can show you which loads run when; we list some in our cheaper first steps.

Step two: consider panel orientation

In most of the U.S., south-facing panels produce the most total energy. West-facing panels produce less in total but more in the late afternoon.

Under net billing with TOU, a west-facing array can sometimes be worth nearly as much as a south-facing one, because more of its output lines up with higher-priced hours or gets used directly in the late afternoon. Under full annual net metering, total kWh usually matters more, so south tends to win.

Don’t take anyone’s word for it. Ask the installer to model your actual roof faces against your actual rate plan, and compare the results in compare options.

Step three: decide whether a battery helps

A battery lets you move solar energy from cheap hours to expensive hours. It helps most when three things are true:

1. The gap between peak and off-peak (or export) prices is large.
2. Exports earn little, so storing power is worth more than selling it.
3. You can’t shift enough load to use your midday solar directly.

Simple illustration

Here’s an illustration with round numbers. Your rates will differ.

• Peak price: 45 cents per kWh
• Export credit: 5 cents per kWh
• Battery round-trip efficiency: about 89% (the spec for Tesla’s Powerwall 3)

Each kWh you store instead of exporting gives up 5 cents and later offsets about 0.89 kWh of peak power, worth about 40 cents. Net gain: roughly 35 cents per kWh. Cycling 3,000 kWh a year that way is worth about $1,050 a year.

Now change one thing: suppose exports are credited at full retail (45 cents at that hour, or close to it). Storing the kWh gains almost nothing and loses about 11% to efficiency. The battery saves essentially nothing on your bill.

That’s the core rule: batteries pay on bill savings when export credits are low and peak prices are high. Under full retail net metering, the grid acts like a free battery. The full analysis is in do solar batteries pay off?, and you can model your case in the battery calculator.

Bottom line: Shift loads first, then check orientation, and only then price a battery. A battery that’s justified purely by “TOU savings” should come with a clear calculation showing peak price, export credit and the number of kWh shifted per year.

Demand charges

A few residential plans bill for demand, meaning your highest short burst of power use in a period. Salt River Project in Arizona requires solar customers to choose among specific plans, one of which includes demand charges. Nevada regulators approved a daily 15-minute peak demand charge for southern NV Energy residential customers, with the start date still to be confirmed as of our research.

Solar alone doesn’t reliably reduce demand charges, because a passing cloud or an evening appliance spike can set your peak. A battery that is programmed to cap your grid draw can help. If your plan has demand charges, ask the installer to show how the system handles them, with numbers.

How to choose the right rate plan

Rate plans are where a lot of solar savings are quietly won or lost. Here’s a practical process:

1. Download 12 months of hourly usage from your utility account. Many utilities call this a Green Button download.
2. List every plan solar customers are allowed to take. In some areas there’s only one choice; California NBT customers, for instance, must take an electrification TOU rate such as PG&E E-ELEC, SCE TOU-D-PRIME or SDG&E EV-TOU-5.
3. Estimate your solar production by hour, using the installer’s model or a free tool. Our production checker can sanity-check annual output.
4. Run your usage plus solar against each plan. Many utilities offer rate comparison tools for this, and our calculator applies TOU periods.
5. Recheck after a full year. Your real usage with solar may differ from the estimate, and utilities change plans and prices.

Also look at rate trends. Our electricity rate history tool shows how prices have moved. Nationally, residential prices rose about 3.1% a year in nominal terms from 2005 to 2025, according to EIA data, but TOU period prices can change in different directions within a single rate case.

Questions to ask an installer about TOU

• Which rate plan did you assume in my savings estimate, and will I be required to switch?
• What share of my solar output do you expect me to use directly?
• How are exports credited during each TOU period?
• Did you model a west-facing array, and how did it compare?
• If you’re quoting a battery, how many kWh a year will it shift, and at what price difference?
• Does the estimate include fixed monthly charges that solar can’t offset?

If the answers are vague, use the quote comparison tool to see how the quote stacks up, and read why your bill can stay high with solar for the most common surprises.