Time-of-use (TOU) electricity tariffs charge different rates depending on when you use power. For solar battery owners, understanding and optimising around these tariffs can dramatically increase your savings. This guide explains how TOU tariffs work, why they matter for battery owners, and practical strategies to maximise the value of your stored solar energy.
Understanding Time-of-Use Tariffs
Traditional flat-rate electricity tariffs charge the same price per kilowatt-hour regardless of when you use power. Time-of-use tariffs, by contrast, divide the day into different pricing periods that reflect the actual cost of generating and delivering electricity at different times.
Typical TOU Periods
Most TOU tariffs include three pricing tiers. Peak periods represent the most expensive electricity, typically occurring during late afternoon and early evening (roughly 3pm to 9pm on weekdays) when demand is highest. Shoulder periods are moderately priced and usually cover morning and early afternoon hours, as well as weekends. Off-peak periods offer the cheapest electricity, typically overnight (10pm to 7am) when demand is lowest.
The exact hours and rates vary between retailers and can differ by season. Summer peak periods may extend later into the evening due to air conditioning demand, while winter peaks might start earlier when heating loads increase in the late afternoon.
Key Takeaway
Peak electricity can cost two to three times more than off-peak rates. Your battery's ability to shift energy usage from peak to off-peak periods is where the real savings occur.
Why TOU Tariffs Matter for Battery Owners
Solar batteries create value by allowing you to use stored energy instead of buying from the grid. On a flat tariff, every kilowatt-hour from your battery saves you the same amount. On a TOU tariff, a kilowatt-hour used during peak periods saves you significantly more than one used during off-peak times.
The Arbitrage Opportunity
With a well-configured battery and TOU tariff, you can engage in energy arbitrage, which means storing cheap energy and using it when electricity is expensive. Your solar panels charge your battery during the day for free, then your battery powers your home during expensive peak evening hours. Some systems even allow you to charge from the grid during cheap off-peak periods if your solar doesn't fully charge the battery, then use that stored power during peak times.
Consider a typical scenario: peak electricity costs 45 cents per kWh, while off-peak costs 15 cents per kWh. Using 10kWh from your battery during peak hours saves you $4.50. If that same 10kWh were used during off-peak (or if you had no battery and used grid power during peak), the value would be vastly different.
Optimising Your Battery for TOU Tariffs
Most modern battery systems can be programmed to optimise around TOU tariffs automatically or semi-automatically. Understanding the available settings helps you get the most from your system.
Basic TOU Mode
In basic TOU mode, the battery prioritises self-consumption during the day, then discharges during peak periods to avoid expensive grid purchases. Solar excess charges the battery before exporting to the grid. This mode maximises savings by ensuring your battery's energy is used during the highest-value hours. Most systems allow you to input your tariff's time periods so the battery knows when peak rates apply.
Advanced Grid Charging
Some battery systems support grid charging during off-peak periods. This can be valuable in winter when solar generation may not fully charge your battery, during extended cloudy periods, or when the price differential between off-peak and peak is large enough to justify the efficiency losses. However, grid charging involves round-trip efficiency losses of 10% to 15%, so it only makes financial sense when peak rates are significantly higher than off-peak rates. Calculate whether the arbitrage value exceeds the energy losses before enabling this feature.
Pro Tip
Grid charging makes sense when the peak rate is at least 2.5 times the off-peak rate to account for efficiency losses. At a 3:1 ratio, you're clearly ahead even after losses.
Choosing the Right Tariff
Not all TOU tariffs are created equal, and the best tariff for a battery owner may differ from what suits a household without storage. When comparing tariffs, consider several key factors.
Peak Period Timing
Ideally, peak periods should align with your evening usage patterns, typically occurring after your solar panels stop generating. A tariff with peak hours from 3pm to 9pm gives your battery maximum opportunity to offset expensive power. Tariffs with very early peak periods (starting at 1pm or 2pm) may be less advantageous if your solar is still generating during those hours.
Rate Differentials
Larger differences between peak and off-peak rates create more value for battery owners. A tariff with 50-cent peak and 15-cent off-peak rates rewards battery usage more than one with 35-cent peak and 25-cent off-peak rates. Calculate the annual value based on your expected battery throughput and the rate differentials.
Feed-in Tariff Interaction
Some TOU tariffs also apply time-varying feed-in tariffs, paying more for solar exported during peak periods. If your battery can't absorb all your solar generation, a tariff with higher peak feed-in rates might be valuable. However, most households with appropriately sized batteries export relatively little during peak periods.
Seasonal Considerations
TOU optimisation isn't a set-and-forget activity. Seasonal changes affect both your solar generation and your energy usage patterns, which may warrant adjusting your approach.
Summer Strategy
During summer, longer days mean more solar generation and fuller batteries. Peak periods often extend later, aligned with air conditioning demand. Your battery should easily cover peak period usage, so consider whether grid charging is necessary at all during this season. The main challenge is ensuring enough battery capacity remains for evening air conditioning if you run it overnight.
Winter Strategy
Winter brings shorter days, reduced solar generation, and earlier peak periods starting when the sun is already low. Your battery may not fully charge from solar on cloudy days. This is when grid charging during off-peak periods can be most valuable, topping up your battery overnight so it can cover the following evening's peak demand.
Seasonal Tip
Review your battery settings at least twice a year—at the start of summer and winter—to ensure they're optimised for the current season's conditions.
Load Shifting Strategies
Beyond battery settings, you can maximise TOU savings by shifting discretionary energy loads to optimal times.
Shift to Solar Hours
Run major appliances during peak solar generation when possible. Dishwashers, washing machines, and pool pumps can often be scheduled to run during midday hours when solar is abundant. This preserves battery capacity for evening peak hours when you can't shift loads as easily.
Avoid Peak Period Usage
For loads you can control, try to avoid peak periods entirely when possible. Pre-cool your house in the afternoon before peak rates begin using cheap solar power. Cook earlier or later to avoid using the oven during peak hours. Charge electric vehicles overnight during off-peak periods rather than when you arrive home during peak hours.
Monitoring and Adjusting
Regular monitoring helps you understand how well your TOU strategy is working and where improvements might be possible.
Use your battery's app to track when it charges and discharges, how much energy you use during different tariff periods, your grid import costs by time period, and whether your battery typically runs empty before peak periods end. If you frequently run out of battery power before peak periods end, consider adjusting your settings to be more conservative with battery use during shoulder periods, or explore whether a larger battery would be worthwhile.
Calculating Your Savings
To understand the value your battery provides under a TOU tariff, track your monthly grid imports during peak hours (this is what you're avoiding). Multiply peak imports by the peak rate to see what you would have paid without a battery. Compare to what you actually paid, including shoulder and off-peak imports. The difference represents your battery's contribution to avoiding expensive peak power.
Most well-optimised battery systems can reduce peak period grid imports by 70% to 90%, translating to hundreds of dollars in annual savings compared to not having a battery on the same TOU tariff.
By understanding TOU tariffs and configuring your battery system appropriately, you can significantly increase the financial return on your solar battery investment while also contributing to grid stability by reducing your demand during high-stress periods.