What is a time-of-use electricity rate?

A time-of-use (TOU) rate is a utility pricing structure where electricity costs more during peak demand periods and less during off-peak hours like overnight or weekends. The exact spread depends on the utility, season, and tariff. California investor-owned utilities commonly default many customers onto TOU plans, and TOU offerings are also expanding in other states.

How does a battery save money on TOU rates?

A home battery charges during off-peak hours (cheap electricity, or free solar excess) and discharges during peak hours (expensive grid electricity). The savings equals the kWh discharged during peak multiplied by the spread between peak and off-peak rates. A 10 kWh battery saving $0.25/kWh per day generates roughly $912 annually — before accounting for battery degradation, round-trip efficiency losses (~90% for lithium), and the cost of off-peak charging.

What is NEM 3.0 and how does it affect solar savings in California?

NEM 3.0 (California's Net Billing Tariff) replaced NEM 2.0 for new customers in April 2023. Export compensation is now lower and more time-varying than under legacy net metering, which makes self-consumption more valuable and often improves the case for pairing solar with storage.

Is a home battery worth it just for TOU savings?

Usually not unless your rate spread is large and your battery is cycled consistently. Small TOU spreads rarely justify a battery on arbitrage alone. Large spreads can materially improve the economics, but installed cost, usable throughput, battery life, and backup value typically matter more than TOU savings by themselves.

Quick answer: Shifting 8 kWh/day from peak ($0.42/kWh) to off-peak ($0.12/kWh) on a typical TOU plan saves $2.40/day or roughly $876/year — though battery roundtrip efficiency losses (~10%) and degradation reduce the real savings.

Solar & Battery

Time-of-Use Battery Savings Calculator

Find out how much a home battery saves by charging at off-peak rates and discharging during expensive peak hours. Start with benchmark TOU presets, then edit the peak and off-peak prices to match your actual tariff.

Inputs

State

Utility / benchmark rate plan

Illustrative all-in benchmark based on PG&E's 4pm–9pm daily TOU structure. Edit the rates to match your latest bill.

Peak rate ($/kWh)

Off-peak rate ($/kWh)

Daily peak-hour usage: 5.0 kWh

0.5 kWh20 kWh

Battery capacity: 13.5 kWh

5 kWh40 kWh

Battery installed cost

Peak hours: 4pm–9pm daily

Annual TOU savings

$493

5.0 kWh shifted/day · $1/day

Daily savings

Monthly savings

$41

Battery payback

24.4 yrs

Rate spread

$0.270/kWh

Peak hours: 4pm–9pm daily · Illustrative all-in benchmark based on PG&E's 4pm–9pm daily TOU structure. Edit the rates to match your latest bill.

Savings assume battery can fully shift 5.0 kWh from peak to off-peak every day. Actual results depend on usage patterns and rate plan details.

How we calculate TOU savings

This simplified calculator estimates TOU arbitrage by multiplying the energy shifted out of peak hours by the spread between peak and off-peak electricity prices.

Daily Savings = Shifted Energy (kWh) × Rate Spread ($/kWh)

Annual savings multiply the daily figure by 365. The built-in utility presets are illustrative benchmarks based on published TOU structures, so you should overwrite them with your bill values before treating the result as a decision-grade estimate.

Frequently Asked Questions

What is a time-of-use electricity rate?: A time-of-use (TOU) rate is a utility pricing structure where electricity costs more during peak demand periods and less during off-peak hours like overnight or weekends. The exact spread depends on the utility, season, and tariff. California investor-owned utilities commonly default many customers onto TOU plans, and TOU offerings are also expanding in other states.
How does a battery save money on TOU rates?: A home battery charges during off-peak hours (cheap electricity, or free solar excess) and discharges during peak hours (expensive grid electricity). The savings equals the kWh discharged during peak multiplied by the spread between peak and off-peak rates. A 10 kWh battery saving $0.25/kWh per day generates roughly $912 annually — before accounting for battery degradation, round-trip efficiency losses (~90% for lithium), and the cost of off-peak charging.
What is NEM 3.0 and how does it affect solar savings in California?: NEM 3.0 (California's Net Billing Tariff) replaced NEM 2.0 for new customers in April 2023. Export compensation is now lower and more time-varying than under legacy net metering, which makes self-consumption more valuable and often improves the case for pairing solar with storage.
Is a home battery worth it just for TOU savings?: Usually not unless your rate spread is large and your battery is cycled consistently. Small TOU spreads rarely justify a battery on arbitrage alone. Large spreads can materially improve the economics, but installed cost, usable throughput, battery life, and backup value typically matter more than TOU savings by themselves.

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Time-of-Use Battery Savings Calculator

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Reviewed April 2026

Methodology and source note

PowerSizing calculators use shared formulas, documented assumptions, and current planning inputs that are summarized on the methodology page. Use these tools for first-pass planning, comparison, and sanity checks, then confirm local code, pricing, utility tariff, and installer specifics before you buy equipment.