Time-of-Use (TOU) Rates
A utility rate tariff where electricity prices vary by time of day, charging highest rates during peak demand afternoon and evening hours.
Time-of-Use (TOU) pricing is a utility tariff structure designed to encourage consumers to reduce electricity consumption during peak demand hours.
Under TOU plans, the utility divides the day into peak, mid-peak, and off-peak rate tiers. Peak hours typically occur between 4 PM and 9 PM when electric demand spikes as people return home.
Home batteries maximize financial savings under TOU plans through rate arbitrage: storing cheap solar power generated during off-peak morning hours, and automatically discharging it to power the home during expensive peak hours.
Why it matters
TOU rate shifting is the single largest financial driver of battery ROI in high-utility-rate states like California, Arizona, and New York.
Example
Discharging a 13.5 kWh battery during 50¢/kWh peak hours instead of buying grid power saves up to $6.75 per day in electric bills.