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What ‘s “Time of Use” (TOU)?

Dear Solar Fred,

What the heck is “Time of Use?” It sounds like a warranty or something. Should I get it, whatever it is?


Busy Barbara

Dear Busy Barbara,

Time of Use (TOU) has nothing to do with a warranty. It’s actually a rate plan that your utility may or may not have, though most do for solar and/or wind. Time of Use works with net metering, something we’ve discussed earlier, to make your new electric bill lower–and therefore make solar have a faster payback. Here are the simple basics:

  • During the day, especially during the longer days of summer, your solar panels produce more electricity than your house needs. So you send the extra energy back to the grid for storage, and at night, when the sun isn’t shining and your solar panels aren’t producing, your electric company sends you back the electricity that you didn’t use. This is basically net metering.
  • That power that your panels generate during the day and send back to the grid is the most expensive power of the day. Businesses and factories need that power and are willing to pay top dollar for it. –So does your utility company.
  • With Time of Use Rate, the Utility buys the energy your solar panels produce at the high day time “peak” rate. Now here’s the big savings:
  • At night, when you the sun isn’t shining and you buy some or all of that power back, you buy it back at the cheaper night time rate. So you sell the solar electricity high, let’s say 10 cents a watt, and buy back the night time “off peak” electricity at 5 cents a watt. You make a profit of 5 cents a watt on the energy your panels produce! That’s Time of Use.
  • Your utility and the its various TOU rate plans determine the “peak” time periods. Some peak times are broken up to into 4 time periods, morning, night, and afternoon, and evening and weekends, each with its own rate. Others, like Southern California Edison, have peak rates set at M-F, 10am-6pm. All the other times are off-peak.
  • If you’re in California and you’re considering solar for your home, you will automatically be added to a TOU plan. Check out how to use California’s TOU plans to your advantage.
  • Solar Fred Caution: If you’re a stay-at-home parent or a person with a home office, you may not benefit from Time of Use because you’re using up all of your solar power, plus buying extra coal power to run your computer(s) and the diaper genie. So you may be better off with the regular flat rate if this is the case. Consult with your installer about your energy usage during the day and the TOU rate plans. You’ll still have net metering, but you won’t have that bonus profit.
  • Solar Fred Tip: Properly factoring in TOU into your initial solar panel design can decrease your system size because of the extra savings. Remember: With net metering, utilities generally DON’T pay you extra if you lower your yearly bill past zero. So you want to make sure you have just enough solar power to get your bill close to a zero, but not lower than that.

Last modified: September 14, 2018

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Properly factoring in TOU into your initial solar panel design can decrease your system size because of the extra savings. So you want to make sure you have just enough solar power to get your bill close to a zero.

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