Time-of-Use Rates and Solar: What Changed and Why It Matters

For most of the history of residential solar, the electricity rate math was simple: you produce a kilowatt-hour, you offset a kilowatt-hour, you multiply by one rate. Time-of-use pricing has broken that assumption for tens of millions of Americans, and the economics of solar have shifted substantially as a result.

A time-of-use (TOU) rate charges different prices depending on when you use electricity. Peak hours — typically 4 to 9 pm on weekdays — can cost three to four times the off-peak rate. California PG&E TOU-C customers pay around $0.40/kWh during the evening peak and $0.12/kWh overnight. That is a 3.3× spread that fundamentally changes the solar value calculation.

Here is the mismatch problem: solar panels generate most of their energy between 9 am and 3 pm. Peak pricing runs from 4 to 9 pm. Without a battery, a homeowner on a TOU tariff exports cheap midday solar at a low net billing rate, then buys expensive peak power in the evening. Depending on the utility, this can silently subtract $300 to $600 per year from what a simpler flat-rate analysis would predict.

A battery changes everything. A 13.5 kWh battery charges from solar at midday when electricity is cheapest and discharges during the 4 to 9 pm peak when it is most expensive. Instead of exporting at $0.06 and reimporting at $0.40, you use stored solar at effectively zero cost to replace the priciest electricity of the day. On high-spread utilities, this alone can add $500 to $1,200 per year in savings versus solar without a battery.

Not all TOU rates justify a battery. When the peak-to-off-peak spread is below about 1.5×, the arbitrage value rarely covers battery cost. At 2.5× or higher, the economics usually pencil out within 7 to 9 years. Use our TOU Rate Optimizer to model your specific utility before making a battery decision.

Even without a battery, homeowners on TOU can recover $150 to $400 per year through load-shifting: charge your EV at midnight, run the dishwasher at 10 pm, pre-cool your house to 72°F at 2 pm using solar power before the peak window starts. These zero-cost behavioral changes capture significant value from your solar investment.