Cheap Solar: The Advantage of Tierd Rates

Published on May 25, 2009 by Tor a.k.a. "Solar Fred".
Categories: Affordable Solar, Solar Components.

In many States such as California, utilities often will charge customers different rate tiers for kilowatt hour usage. The more power you use, the higher your rate jumps for that above average usage. As a result, using solar with tiered rates can save a lot of money.

  • Steps tiers Cheap Solar: The Advantage of Tierd RatesFor example, the lowest rate in PG&E territory is about 11 cents per kilowatt hour (kWh) for the “base tier.” Everybody gets this rate for a certain amount of usage.
  • When you use more than this certain amount, the utility charges you HIGHER rates. The next rate tier above 11 cents is 25 cents/kWh–more than double. If you use even more, the rate jumps even higher to 35 cents/kWh. The utilities do this to penalize energy hogs and to encourage conservation. One way to do that: Go solar.
  • If you buy enough solar panels to offset your usage by say just 50%, you’re sort of tricking the utility into thinking you use a lot less energy. In reality, your solar panels are generating enough to get you out of the higher tiers back into the lowest tier.

Read the 3 brilliant comments below or add yours!

Pingback on August 7th, 2009.

[...] Tiered rates (instead of flat electric rates)is the utility’s way of punishing energy hogs for using so much damn energy with their old light bulbs and their old refrigerators. The more you use, the higher your rate. The good news? Solar can make it seem like you’re in the cheapest rate tier, hee-hee, ha-ha, it is to laugh. Read all about tiered rates here. [...]

martin Identicon Icon martin
Comment on January 21st, 2010.

A ~3kW PV system may have a greater value depending on the value of energy based on usage?

For example, an approximate size of ~3kW Solar PV system, if the value of energy is approximately ~30 cents per kWh, at an approximate ~400 kWh usage depending on location would be a value of approximately ~$1440 per year.

For example, an approximate size of ~3kW Solar PV system, if the value of energy is approximately ~9 cents per kWh, at an approximate ~400 kWh usage depending on location would be a value of approximately ~$432 per year.

In addition, a ~3kW PV system may have a greater value depending on the value of energy based on time.

If the value of energy increases based on time, the azimuth of the array may increase to maximize the value of energy. Although quantity of energy may decrease, the internal rate of return (IRR) increases.

A value of energy of ~3kW PV system based both on time and usage, may be maximized greater than the marginal cost of capital (MCC).

In other words, use solar as a way to minimize amount you pay. For the same size array, the more energy you use, the less money you loose. But if you use energy, based on the time of day, also adjust the azimuth of the array, and further minimize the amount you pay?

martin Identicon Icon martin
Comment on January 21st, 2010.

“Shall the shadow go forward ten steps, or shall it go back ten steps?”

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