Solar

Time-of-Use (TOU) Rate A utility pricing plan where electricity costs more during peak hours and less off-peak

Alex Rivera By Alex Rivera, Senior Solar Editor · Updated 2026-06-09
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A Time-of-Use (TOU) rate is a utility pricing structure where the price you pay for electricity changes based on the time of day, costing more during peak demand hours and less off-peak. Peak periods are often in the late afternoon and evening, when overall grid demand is highest, while off-peak hours typically fall overnight and midday. For solar owners, TOU rates make battery storage and load shifting more valuable, because you can store cheaper or self-generated power and use or export it when prices are highest. This dynamic is especially important under NEM 3.0, where the value of exported solar varies by time. Exact peak windows, rate tiers, and dollar amounts vary by utility and state, so check your specific plan to understand when usage is most expensive.
Also Known As
TOU pricing Time-of-Use pricing Peak/off-peak rates Time-varying rates
Used in Context
  1. Under a TOU rate, the homeowner programmed her battery to discharge during the expensive evening peak instead of pulling from the grid.
  2. A Dreamy Leads solar quote explained how switching to a TOU rate could change the payback math once NEM 3.0 export values were factored in.
  3. The installer recommended adding storage because the customer's utility had moved everyone onto mandatory TOU rates with steep peak pricing.
Related Terms
Solar NEM 3.0 (Net Billing Tariff) California's solar export rule that pays avoided-cost rates instead of full retail credit Solar Solar Battery Storage A home battery that banks excess solar power for nighttime, outages, or pricey peak hours Solar Kilowatt-Hour (kWh) The unit of energy used for electricity billing—one kilowatt of power used for one hour Solar Photovoltaic (PV) System A solar electric setup that turns sunlight into usable electricity
Frequently Asked Questions

Why do TOU rates matter for solar owners?

TOU rates change electricity prices by time of day, charging more during peak hours and less off-peak. This makes battery storage and shifting your usage more valuable, since you can avoid buying expensive peak power and instead use stored or self-generated solar energy when grid prices are highest.

When are TOU peak hours usually?

Peak hours are often in the late afternoon and evening, when grid demand is highest, while off-peak periods typically fall overnight or midday. Exact windows vary by utility and state, so review your specific rate schedule to know when electricity is most expensive for your home.

How does NEM 3.0 affect TOU rates?

Under NEM 3.0, the value of solar energy you export to the grid varies by time of day, which works alongside TOU pricing. Because exports and usage are both time-sensitive, battery storage and load shifting become even more valuable for maximizing savings. Specifics vary by utility and plan.

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