You might have noticed that your energy bill contains phrases like “off-peak electricity hours” and “peak” usage. You might have also noticed that the electricity rates you pay differ depending on the amount you’ve consumed and the time of day.
In short, off-peak and peak electricity hours affect your daily energy rates. Let’s explore what this all means.
[Related: How To Read Solar Electric Bills]
What Are Peak and Off-Peak Electricity Hours?
So, what are peak hours for electricity? Well, when it comes to electricity, peak hours (and off-peak hours) are essentially the opposite. Let us explain.
For solar and nonsolar homeowners as well as ratepayers, understanding how off-peak and peak electricity hours affect your energy bill is vital. Why? Knowing the basics helps you — an energy consumer — develop strategies for more efficient and less costly energy use.
One such strategy for solar homeowners is implementing a “time-of-use” (TOU) plan, which can also shorten your solar investment’s payback period.
[Related: 10 Reasons Why Solar Energy Should Be Every Homeowner’s Next Investment]
Understanding Peak Electricity Hours
Before we look more closely at what the peak electric hours are, we need to understand one thing. Energy producers must provide a minimum amount of power to the electrical grid at any given time.
Whether gas, coal, nuclear or renewable energy fuels a power plant, it must dedicate and send a percentage of generated energy to the grid. This minimum power requirement for utilities is called the “base load.”
However, electricity demand shifts throughout the day, and utilities charge a different usage rate depending on the time of day.
Historical energy usage patterns allow utility companies to know the daily times when residential homes have the greatest energy demands.
Unsurprisingly, residential energy demand is greatest when people are home, awake and active. During the week, peak usage can occur in the mornings and afternoons, when people wake and return home from work and school.
These high energy demand times are called “peak” electricity hours. And they’re more important than they may initially seem — too much demand can strain the grid and cause energy blackouts. Accordingly, utilities charge higher electricity rates during peak TOU.
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TOU: How Does It Work?
Many utilities categorize TOU into three periods that may vary per the company, operating region and season. Here are the primary TOU time frames:
- Peak electricity hours: Weekdays between 5:00 p.m. and 8:00 p.m. and on weekends
- Mid-peak hours: Transitional period between peak and off-peak hours
- Off-peak electricity hours: Typically weekdays before 4:00 p.m. and after 9:00 p.m.
Basing the cost of electricity on TOU lets utility companies influence consumer behavior and maintain the electrical grid’s integrity.
For example, if someone knows they might pay up to three times the cost of electricity when running a dishwasher during peak electric hours, then they’ll (hopefully) run it during off-peak electric hours. And in turn, this helps their utility company manage power demand.
Off-Peak TOU and Rate Savings
Off-peak hours for electricity are the times when power demand is low, which results in lower costs for consumers.
During off-peak electric hours, utilities and power producers don’t pay as much to generate electricity because the total power demand is lower. When demand increases, grid operators request more electricity from producers.
If electricity generators can’t increase production quickly enough, utilities then must purchase extra electricity from other sources. This results in higher wholesale energy prices, which lead to higher electricity rates for consumers.
What does this mean for you in dollars and cents? The rates consumers pay for 1 kilowatt-hour (kWh) of energy vary by region and utility company.
For example, a utility company in Colorado charges its highest rates in the summer, when solar panels produce the most power. It might charge as much as 17 cents to 28 cents per kWh during peak usage. Meanwhile, off-peak rates might drop as low as 10 cents per kWh (about one-third the cost of peak usage).
What Peak Usage and Off-Peak Usage Mean for Solar Consumers
Electricity rates for grid-tied solar panels (aka hybrid solar panels) also differ by utility company, region and rate plans.
For example, a utility company in Texas might estimate the kWh cost for solar power is about half that of a nonsolar consumer under a TOU plan. However, savings are less if a solar consumer uses too much energy during peak electricity hours. Solar consumers also must pay a monthly service charge for grid access and line maintenance.
Of course, solar consumers can lower their energy bills if a utility has adopted a net metering policy. In this case, utilities credit the solar consumer for the excess solar power they generate (and don’t use). This is where solar storage batteries come in.
What Do Solar Batteries Have To Do With It?
Solar consumers should consider adding battery storage (such as the Maxeon (previously SunPower) SunVault or Tesla Powerwall) to their home solar system to manage TOU and avoid peak charges.
During off-peak periods, solar panels charge the battery. And during an electric peak, the consumer uses electricity from the battery, thus avoiding peak charges and grid stress.
Peak and off-peak usage plans also support the move to cleaner energy in some states. For example, in Colorado, clean energy sources like solar and wind increasingly power the grid.
However, energy demand spikes after sunset, so panels don’t generate as much (if any) electricity. As a result, utilities have to cover power demand via fossil fuel sources.
By implementing TOU plans, utilities can incentivize consumers to use less energy when solar generation is lower and use more energy when solar generation is higher. As a result, solar consumers reduce overall reliance on carbon-based energy sources.
The Bottom Line
For both solar and nonsolar homeowners, the cheapest electricity lies outside mid-peak and peak electricity hours.
Timing your lighting, appliance and HVAC usage around these hours carries multiple benefits:
- Helps you avoid peak TOU charges
- Enables shorter payback timelines for infrastructure investment
- Allows utilities and operators to better maintain the electrical grid
[Related: How Does the U.S. Power Grid Work?]
Contact Freedom Solar for Efficient Maxeon (previously SunPower) Panels
Whether you’re generating power during off-peak and peak electricity hours, Freedom Solar Power is always here to support your energy generation.
We provide Maxeon (previously SunPower) solar panels, the most efficient panels on the market. So you can rest assured that energy independence is at your fingertips, regardless of the hour.
To start harnessing solar power, call us at (800) 504-2337 or complete our online inquiry form. An energy consultant will be in touch for a free consultation and quote!
Featured image via Unsplash