The Quick Guide To Off-Peak Electricity Hours
4 - Minute Read
PUBLISHED: Jul 20, 2022
If you’ve ever taken a close look at your utility bill, you might have noticed the phrase “off-peak electricity hours” or something similar like “peak rates.” What does this mean and what impact does it have on your energy usage and electric bill?
Let’s decode this term so you can save money while improving the environment, regardless of whether you’re a solar or non-solar homeowner.
Energy Bills Stink
Understanding Peak Hours For Electricity
All around the clock, power plants provide a “base load” of energy to utility companies, whether powered by gas, coal, nuclear or renewable energy. Base load is the minimum amount of power that an electrical grid will need in a given amount of time. Utilities might use other sources to supplement the base load in response to demand, which fluctuates throughout the day. “Peaker” power plants are smaller, more responsive plants that meet these spikes in demand.
Utility companies know the times of greatest demand throughout the day. These are generally in the morning and in the evening on weekdays when people are waking up and returning home from work and school. If there’s too much demand for the utility’s generation capacity during these times, the strain on the grid could cause blackouts.
The other times of day are considered off-peak electricity hours; this is when electricity is the cheapest. You can save money (and prevent blackouts) by running your appliances when electricity use is at its lowest.
Breaking Down Times Of Use (TOU)
Basing energy costs on Time Of Use (TOU) is a method for utility companies to change customer electricity usage. When utility customers know they’ll pay a higher rate for using their dryer or dishwasher during peak hours, they might wait until a time when rates are lower – which helps utility companies manage the demand for power.
Many utility companies break TOU into three periods:
- Peak electricity hours areweekdays 5:00 – 8:00 p.m. and weekends.
- Mid-peak hours are the shoulder time between peak and off-peak hours.
- Off-peak electricity hours are typically on weekdays before 4:00 p.m. and after 9:00 p.m.
How Much Cheaper Is Electricity At Night?
The rates that customers will pay per kilowatt-hour (kWh) tend to vary by region and utility company. Consider, for example, an Arizona utility company’s policies, which show just how big of a difference off-peak usage can make.
The company’s highest prices, which are not surprisingly during the hot summer when solar panels in Arizona produce the most power, max out at just over 24 cents per kWh during peak times. The off-peak hours see a drop to less than 8 cents. That’s less than a third of the peak usage.
What TOU Rate Policies Mean For Solar Customers
Rate policies for customers’ grid-tied solar panels vary again by region, utility company and rate plans. Once again using the same Arizona utility company as an example, its website estimates that per kWh is about half the TOU plan.
However, the savings can be less if solar customers use too much energy during peak hours. Customers must also pay a monthly service charge for grid access and maintenance.
You may reduce your bills if your utility company has net metering policies. Net metering is a billing method that allows the company to credit solar homeowners for power they generate in excess of what they consume.
How Solar Customers Can Beat Peak Hours For Electricity
Considering that using electricity during peak hours can reduce savings from your solar panels, you may want to look at a few ways to cut consumption.
Use Major Appliances Wisely
The biggest energy consumers in your house are:
- Air conditioners
- Water heater
- Washer and dryer
- Electric oven/stove
There’s really no way around using your refrigerator, and it’s not easy to work cooking needs around TOU policies. But you can save your dishwashing and laundry chores for later in the evening.
Upgrade To EnergyStar-Rated Appliances
You can also consider upgrading to EnergyStar-rated appliances. It’s an extra expense, but it’s a long-term investment that can reduce your energy use.
With today’s smart appliances, you may be able to program them to run in the middle of the night. Some companies offer plans with super off-peak pricing overnight. You can also shower later in the evening and program your thermostat to run the air conditioner at a higher temperature during peak hours.
Pair Your Solar Panels With A Battery
Adding a battery to your home solar system might be the best way to beat TOU and peak demand charges. During off-peak hours, your solar panels will charge your battery. During peak periods, your home uses electricity from your battery, thus avoiding peak electricity charges. This also eases stress on the grid.
Developers are using this model to build master-planned communities and rental housing that act as virtual power plants. They’re equipping homes and apartments with solar panels and battery packs, along with equipment to seamlessly shift between battery, solar panel and grid power according to the time of day.
Are Solar Batteries Worth It?
Many people who are deciding whether to get solar panels are also researching energy storage. The extra expense of the battery may increase the upfront costs and lengthen your payback period. One popular type of lithium-ion battery with a 13.5 kWh capacity costs $8,500 before federal, regional or utility rebates.
It’s difficult to estimate the total potential savings because of the variation in utility companies’ policies and rates. But, homes with battery storage have the extra advantage of accessing power during a blackout. For this reason, a battery might be well worth the expense, especially if you live in an area that has experienced difficulty with outages.
Vehicle To Grid (V2G) May Be the Future Solution
With more drivers shifting to electric vehicles, it seems that another solution may be available for powering homes with batteries – and avoiding time-of-use rates. With V2G or bi-directional charging technology, homeowners could use their vehicles for backup or peak-hours power.
V2G is still technology being developed for the future, so it’s best not to work this into immediate plans to add solar panels to your home.
The Bottom Line: Use Electricity When It’s Cheapest
The cheapest electricity you can pull from the grid will be outside of the peak and mid-peak hours. Timing your chores and HVAC use around these hours to avoid peak TOU charges is smart for solar and non-solar homeowners alike.
Want to know more about pairing batteries with clean energy? Discover the finer details of home energy storage and how to make solar work for you.