Do you know exactly how your utility company is charging you for the power you use? Utility companies around the country are starting to transition from standard rates to something called a “Time of Use” (TOU) rate. So what exactly is a Time of Use rate, and more importantly, how is it going to affect your energy bill?
A Time of Use rate is a variable rate that changes based on the particular time of day that the energy is being used. If you are using during peak hours like the morning or earl evening, the charge is higher. Similarly, energy usage in the middle of the day or late at night incurs a lower charge. This is done to try and encourage people to shift usage to different, less busy times of the day. Now why would utility companies care when you use your energy?
The answer is pretty simple. Utility companies have begun transitioning to time of use rates because the demand on the grid constantly fluctuates. If demand goes too high at one time, it runs the risk of incurring cause a blackout. This recently occurred in Texas which caused may people to have no heat or power in their homes for several days.
So what does this mean for the solar business and solar panel owners? Starting in 2016, states that allow Time of Use rates created a new rule called Net Metering 2.0. Traditional Solar Net Metering allows any excess or unused power generated by your panels to be provided back to the power grid in exchange for utility credits. Essentially, it’s the process of selling the excess power generated by your solar panels back to the utility company at a rate equivalent to the retail rate of electricity. Net Metering 2.0 differs from traditional net metering because the power credit received is based on a time of use rate. This means that each kWh of energy that you use is not worth the same as the last. The old net metering would be giving the same amount of credit no matter what time of the day excess energy is sent back to the grid. Homeowners can strategically take advantage of having solar on TOU if they have good west-facing roof planes. Additionally, by adding a home battery backup/storage system will allow you to work during heavy peak hours. While renewable energy does add some complexity into electricity grid management, the changes made are good because they allow more renewable energy to be added to the grid with less reliance on expensive infrastructure upgrades.
