Time-of-Use Rates and Solar

Time-of-use pricing charges different rates at different times of day. For solar owners it's consequential, because in many places the highest-rate hours no longer overlap with when solar produces.

Solar under time-of-use rates

TOU changes the design goal from most kWh to most valuable kWh. A west-facing array producing 10% less annually can be worth more than a south-facing one if it delivers during the peak price window — and a battery makes the orientation question much less important.

Why peak moved to the evening

Grids used to peak in the afternoon, when air conditioning load was highest and the sun was still up — a good match for solar.

As solar penetration grew, that changed. Abundant midday solar reduces the grid's net demand in the middle of the day. Then solar output falls away in the late afternoon while people arrive home, cook, run air conditioning and plug in cars — producing a steep evening ramp in net demand.

Utilities followed that pattern with pricing, moving peak periods later.

The consequence for solar owners: your production peaks when energy is cheap, and stops when it's expensive.

What that means for value

Under a TOU rate, both sides of the equation vary by time:

The retail rate you avoid by self-consuming depends on when you consume it. Offsetting an evening peak-rate purchase is worth far more than offsetting a midday off-peak one.

The export credit you receive may also vary by time, depending on your tariff.

So the question stops being "how much do I produce?" and becomes "how much value does my production land on?"

See net metering explained and how solar payback works.

Design response 1: orientation

West-facing arrays shift production later into the day. Less total output than south-facing, but more of it lands in high-value evening hours.

Under a TOU rate with an evening peak, that trade frequently favours west. It's the clearest case where maximizing total production is the wrong objective.

An east-west split flattens the curve, producing across more hours rather than concentrating at midday.

See solar panel orientation and tilt.

Design response 2: batteries

This is where batteries make their clearest economic case.

A battery stores midday production — which would otherwise be exported cheaply or consumed at off-peak value — and discharges it during expensive peak hours.

The value per kilowatt-hour cycled is roughly the spread between peak and off-peak rates (or between peak retail and the export credit). Where that spread is wide, the arbitrage is meaningful.

Combined with net billing, TOU makes batteries substantially more attractive than they were under flat rates with full net metering. See solar battery payback and what size home battery do I need.

Most battery systems can be configured to prioritize peak-period discharge, which is worth setting up deliberately rather than leaving on a default backup-only mode.

Design response 3: shift load, for free

The cheapest response and the one people skip.

Move flexible consumption out of peak hours and, ideally, into your production hours:

• EV charging — the most schedulable large load in most homes. See off-peak EV charging and the off-peak charging savings calculator.
• Water heating — a tank stores energy, so heat it midday and use it whenever. Heat pump water heaters schedule easily.
• Dishwasher and laundry on delay timers
• Pool pumps during production hours
• Pre-cooling the house before peak, so the AC coasts through the expensive window

Each of these converts a peak-rate purchase into a self-consumed midday kilowatt-hour. No capital required, immediate effect.

Should you switch to TOU?

If it's optional, compare properly rather than guessing:

1. Get your consumption by hour — interval data from your utility if available
2. Get your production by hour — from monitoring, or from an estimate
3. Overlay them on the rate's peak windows
4. Model both tariffs with your actual pattern
5. Consider whether you'll shift load, and model that scenario too

A household that's out all day and home in the evening looks very different from one working from home.

Note that some utilities require solar customers to be on a specific rate, which removes the choice. Check what applies to you before designing around a tariff you can't have. See utility rates and model with the electricity cost calculator.

Watch for other charges

TOU tariffs sometimes come with additional structures:

• Fixed monthly charges that solar doesn't offset
• Demand charges in some residential tariffs, billed on your highest power draw
• Minimum bills
• Seasonal rate variation, with different peak windows in summer and winter

Demand charges deserve particular attention if they apply, because they reward flattening your peak draw, not just reducing total consumption — a different optimization, and one a battery can also serve.

Seasonal interaction

Peak windows often shift seasonally, and so does solar production.

The awkward case: winter evening peaks, when production is lowest and — after electrifying heating — consumption is highest. A battery charged from a small winter solar output has less to work with.

Worth modelling monthly rather than annually if your consumption is heating-dominated. See solar production by season and all-electric heating in cold climates.

The bottom line

Time-of-use rates moved peak pricing into the evening precisely because solar flattened midday demand — so your production now lands mostly in cheap hours. Respond by orienting west to push production later, adding a battery to move midday output into peak hours, and shifting flexible loads out of peak for free. Compare tariffs against your actual hourly pattern rather than assuming, and check whether your utility even gives you the choice.

Model rates with the electricity cost calculator, check returns with the solar panel payback calculator, or read is solar worth it without net metering.