What is it?

Time of use (TOU) rates refer to utility rates that are higher during certain hours when peak usage occurs due to overall higher demand. These rates are put in place to associate with the larger power demand and increased strain on the grid. What does that mean for you? In the end, a larger electric bill when you use power during peak rate hours. TOU rates are much harder to calculate because the rates fluctuate throughout the day, rather than a flat rate multiplied by the amount of electricity you use in each month. This can make it tricky to estimate what your bill is going to be in a given month, but in general your rates will be going up in the evening every day.

An example of this comes from PG&E’s website.

• Peak rates are from 4pm-9pm every day.

• Off-peak rates are outside of 4pm-9pm every day.

This means you will be paying more for electricity between the hours of 4pm and 9pm. If you do not own solar and you want to save money on your utility bill, you should reduce power usage during these hours. However, if you are an owner of solar panels, most of the time you need not worry about peak hours at all because you power your own house. Your solar rates won’t fluctuate because you are your own source of energy. This is yet another reason why going solar equals huge savings.

Net Metering 2.0

Net Metering 2.0 (NEM 2.0) is a California update to the original net metering structure. It was implemented in 2019, to succeed NEM 1.0. The reason 2.0 came along stems from the rules of the first net metering structure. Net metering is the process of utility companies awarding credits to solar panel owners from excess power generated by their panels. Those credits are then used when households use more electricity than they are producing (like during the nighttime hours), so you end up spending even less on electricity. NEM 1.0 instituted a cap of 5% total solar energy demand for net metering to be available. That cap was rapidly approaching in 2016, and so NEM 2.0 was put in place. The original concept of ‘selling’ your power back to the grid and only paying for the ‘net’ of your power usage was preserved, but a few other things changed:

• TOU plans are now mandatory - The time of use plan is now required. The solar industry has since adapted to this change, as most solar panels are placed in such a way that will generate more power during peak hours - shaving off some of the costs associated with TOU.

• Interconnection Fee - Owners of solar panels under 1MW (1,000kWh) now must pay a one-time fee between $75-$150. The vast majority of residential solar systems are under 1MW.

• Non-Bypassable Charges (NBC) - Small charges added to total electricity rates, usually only 2-3 cents per kWh. These charges are not added to the credit for excess electricity ‘sold’ back to the grid, meaning you will earn a small amount less back than you pay for electricity under net metering. While this is a drawback, it is only a small amount of your total electric bill.

Going solar can save you a ton of money from TOU rates. Check out our interactive solar calculator to see how much you can save by switching to solar.