Time-of-Use (TOU) Rates

Time-of-Use (TOU) rates are an electricity pricing structure where the cost per kilowatt-hour varies depending on the time of day. Electricity is more expensive during peak demand periods (typically late afternoon and evening) and cheaper during off-peak hours (overnight and early morning).

TOU rates significantly affect the economics of solar and battery storage. Solar panels produce the most electricity during midday hours, which under TOU pricing are often mid-peak or even off-peak — meaning the credits you earn for excess solar may be worth less than the electricity you buy during the expensive evening peak. This is where battery storage becomes especially valuable: you can store midday solar production and discharge the battery during peak evening hours when electricity costs 2–4 times more. In California, which has mandatory TOU rates for solar customers, the difference between off-peak ($0.15/kWh) and peak ($0.45/kWh) rates is substantial. TOU rate plans are becoming more common across the US as utilities modernize their pricing. Understanding your TOU schedule is essential for maximizing solar savings, properly sizing battery storage, and programming your system’s charge/discharge schedule.