Time-of-Use Rates and Solar: How TOU Changes the Math

For most of solar’s history the rate plan was an afterthought: you paid a flat price per kWh, solar offset it, done. That is no longer the default. Time-of-use pricing is now the standard for new solar customers across much of the US, and it changes the design of a good system.

How TOU works

Instead of one price, the day is split into periods:

Period	Typical hours	Typical price
Off-peak	9pm–3pm	Lowest
Peak	4pm–9pm weekdays	2–3× off-peak
Super off-peak	Midnight–6am (some plans)	Lowest of all

The peak window has been drifting later for a decade. It used to sit at midday, when air conditioning ran hardest. As solar penetration grew, midday supply became abundant and cheap, and the genuine grid crunch moved to the hours after sunset — the “duck curve.” Utilities repriced accordingly.

Why that matters for solar

Your array peaks around solar noon, which on modern TOU plans is now one of the cheapest hours of the day. Meanwhile you use the most power at 6pm, when prices are highest and your panels are winding down.

Under full retail net metering with annual netting, this barely mattered — a kWh was a kWh. Under TOU with time-differentiated credit, exporting at 8¢ and importing at 32¢ is a losing trade repeated 365 times a year.

Three consequences follow.

1. Panel direction changes

A west or southwest array produces perhaps 15% less energy across the year, but produces it later — into the expensive window. On a steep TOU plan the west array frequently earns more dollars than the south one.

If you have both roof planes available, this is a real design decision, not a rounding error. See best direction and angle for solar panels.

2. Batteries start to make financial sense

Under a flat rate, a battery saves you almost nothing — you are just moving kWh from one bucket to an identically priced bucket. Its value is backup, and backup alone.

Under TOU, a battery does something economically real: it stores midday solar worth 8¢ and discharges it at 6pm to displace power worth 32¢. That 24¢ spread, times a few thousand kWh a year, is genuine revenue.

Rough test: multiply your peak-minus-off-peak spread by your usable battery capacity by 300 cycles a year. A 10 kWh usable battery on a 20¢ spread yields roughly $600 a year. Against a $12,000 net cost that is a 20-year payback — marginal. At a 35¢ spread it is $1,050 a year and starts to look like a real investment. Run your own numbers in are solar batteries worth it.

3. Load shifting becomes free money

Before spending anything on hardware, move the flexible loads out of the peak window:

• EV charging — schedule it for after 9pm or overnight super off-peak. This is usually the single biggest win, worth hundreds a year on its own. See solar and EVs.
• Dishwasher and laundry — timers or delay-start.
• Pool pump — reschedule to midday, when your own solar covers it directly.
• Water heater — a heat pump water heater with a timer is effectively a thermal battery.
• Pre-cooling — drop the thermostat two degrees at 2pm, raise it at 4pm, and coast through the peak on the building’s thermal mass.

None of this costs anything but attention, and on an aggressive TOU plan it can beat a battery’s first few years of savings.

How to evaluate a TOU plan before you buy

1. Find out if you have a choice. Some utilities mandate TOU for solar; some offer several TOU variants. The variant matters — a 4–9pm peak is much harder to dodge than a 2–7pm one.
2. Get the actual rate table, per period, per season, including delivery charges. Not the marketing summary.
3. Compute the spread: peak price minus off-peak price. Under about 15¢, TOU is a mild inconvenience. Over 25¢, it should reshape your system design.
4. Check the export credit rules. Are exports credited at the retail price for that period, at an avoided-cost rate, or at an export-specific schedule? This is the difference between good and mediocre solar economics.
5. Ask installers which plan their savings estimate assumes. If the estimate uses your current flat rate but the utility will move you to TOU at interconnection, the savings figure is fiction.

Bottom line

TOU is not a reason to skip solar — solar still beats buying every kWh from the utility. It is a reason to design differently: point some panels west, shift what you can out of the peak hours, and take the battery question seriously instead of dismissing it as a luxury.

Educational estimates only. Tariff structures vary widely by utility and change often. Check your current tariff sheet.