Time-of-use (TOU) rates are an electricity pricing structure where the cost per kilowatt-hour changes depending on when you use power. Unlike flat-rate pricing where you pay the same amount regardless of timing, TOU plans charge higher rates during peak demand periods and lower rates during off-peak hours.
Peak periods — typically weekday afternoons and early evenings from about 2 PM to 8 PM — coincide with times when overall electricity demand is highest. Off-peak periods, including nighttime hours and weekends, offer significantly lower rates. Some utilities also have mid-peak or shoulder periods with intermediate pricing.
TOU rates create an interesting opportunity for solar homeowners, especially those with battery storage. Solar panels produce the most electricity during midday hours, which often overlap with the beginning of peak pricing periods. Without batteries, excess midday production is exported to the grid at net metering rates, while expensive peak-hour electricity is purchased in the evening.
With battery storage, homeowners can strategically store excess solar energy during the day and discharge it during expensive peak hours, maximizing savings by avoiding the highest-cost electricity. This strategy — called peak shaving or load shifting — can dramatically improve the economics of a solar-plus-storage system.
As more utilities transition to TOU rate structures, battery storage becomes increasingly valuable. Homeowners on TOU plans should analyze their usage patterns and consider whether adding batteries could help them shift consumption away from the most expensive hours, turning their solar system into an even more powerful money-saving tool.