Solar Batteries & Time-of-Use Billing

How a Solar Battery Changes the Time-of-Use Billing Equation

In a previous post we looked at some of the pros and cons of adding a battery to your solar system in states like Pennsylvania, where net metering is the law of the land.

Net metering means:

  • You have the right to connect your solar system to the grid so that any excess energy it produces gets sent back into it.

  • Your utility company has to compensate you at the same rate it charges.

Net metering is important because solar panels only generate energy for around five hours during the afternoon, a time when people typically use very little because they’re out and about. When people typically start returning home in the early evening and, hence, use the most energy, on the other hand, solar panels produce little or none.

Net Metering and Batteries

The upshot is that a solar system that meets your annual energy needs is almost certain to also be out of synch with them – producing too much energy during sunny days and not enough at other times. So, absent some way to store that excess daylight energy for later use, it will go to waste, and you’ll have to pay for the electricity necessary to run your home when there’s little or no sun.

Without net metering, the only way around this problem is a battery. But with net metering, your utility company is, in effect, required to store your excess energy for you by giving you a credit for what you send back when there’s lots of sunlight which then pays for the electricity you draw from them when there isn’t.

In states like Pennsylvania with net metering, though there are still some advantages to installing a battery, it would appear that saving money on your electric bill isn’t one of them. But that looks to be changing. Over the last few years, utility companies have been experimenting with something called time-of-use billing. And the concept is rapidly gaining momentum. 

PA utility giants PECO and PPL have both implemented time-of-use programs that, at least for the time being, are optional. Companies in other states have made it mandatory. Given the financial advantage it gives them, mandatory time-of-use billing stands a good chance of becoming the norm. 

Time-of-Use Billing and Batteries

Until recently, utility companies charged a single rate for electricity regardless of use. Just as the name suggests, time-of-use means a more complex billing structure where the rate charges depending on when the electricity is used. Power consumed during “on-peak” hours, when demand is highest, is more expensive during “off-peak” low-demand hours. And that’s where batteries come in. 

If your solar system includes a battery, it will store excess energy during your utility company’s off-peak hours, which are typically during the day when your system is producing the most power. You can then use that energy to power your home during the more expensive on-peak hours, which are often in the evening as people are returning home. As a result, you avoid paying the higher rate.

In fact, your battery can be scheduled so that, whenever possible, it discharges energy back into the grid only during peak-hours, when the rates are highest, maximizing the amount of money you get paid for the surplus power you generate.

Absent a battery, time-of-use billing means you’re stuck paying whatever rate your utility company happens to be charging whenever your system isn’t producing enough power—which is likely to be when rates are highest. And you’re stuck selling it back whenever your system happens to be producing surplus power—which is likely to be when rates are lowest.

In other words, adding a battery to your solar system can flip the script, turning time-of-use billing from a disadvantageous “buy hi, sell low” situation into an advantageous “buy low, sell high” one.

Other Utility Company Billing Schemes

Time-of-use billing isn’t the only new billing scheme that utility companies are enacting. In Massachusetts, Arizona, and Illinois, some have started adding a surcharge based upon the maximum amount of power used over an hour or 15-minute period during a billing period. 

Because a battery gives you more freedom to decide when you draw power from the grid and when you send it back, installing one along with your solar system can help you avoid the extra costs arising from any attempt to penalize you for using what your utility company has deemed “too much power” at a given time.

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