Off-peak electricity hours: Cheapest time to use electricity

In a standard electricity plan, you pay the same rate for your electricity regardless of the time of day. But with time-of-use (TOU) plans, the rate you pay for electricity depends on the time energy is drawn from the grid. You’ll pay different amounts based on a schedule developed by your utility company of peak hours, off-peak hours, and in some cases, super off-peak or partial-peak hours. 

It’s becoming increasingly popular for utilities to offer TOU plans to their residential customers. These types of rate plans often make adding solar panels or a battery to your home very worthwhile.

We discuss what TOU rates mean for you, and how they impact your electric bill.

Your electric bill is based on a charge per kilowatt-hour (kWh), so you’re billed for actual electricity pulled from the grid. Under TOU rate plans, your utility charges you more for electricity usage during afternoon “peak” hours when the electricity demand is higher, also known as peak demand. When demand is lower, the cheapest electricity can be found during “off-peak” hours.

An example of one time-of-use rate schedule with Pacific Gas & Electric in California.

Energy is usually cheapest at night, regardless of region or time of year. But the exact timing depends primarily on your location and the off-peak periods utilities operate. Many rate plans will depend not only on the hours you’re using electricity but also on the season. Summer rates are often higher than winter rates because of energy-intensive air conditioning systems running during hot days. 

On the East Coast, it’s hottest after 2 pm, so you’ll usually need air conditioning during the summer months––so it isn’t surprising that the peak hours for this region are often from 2 in the afternoon until around 6 in the evening. However, in winter, peak hours change to the early morning as homeowners and businesses turn up the heat so that living and work spaces are comfortable. 

PG&E example of special TOU pricing for customers with electric vehicles.

Generally, you can expect peak hours to start sometime in the afternoon and go into the evening when people return home after work and use more lights and appliances. And depending on the season and where you live, you’ll usually pay higher rates on weekdays during certain hours.

Some utility companies offer more than one time-of-use rate plan or option. These TOU rate plans may have different hours classified as peak hours or may even include some “partial-peak” hours that charge less than peak rates but more than off-peak rates.

On-peak hours for the top 10 states by solar power usage

Note: check with your utility company, as rates are subject to change.

In some cases, TOU rate plans can cost you more in the long term, but they also offer significant opportunities to save money. Before you opt into a TOU plan, ask yourself the following questions:

Even if you adjust your habits to use more electricity during off-peak hours, it’s not feasible to expect you to eliminate using electricity during the other hours of the day. There are other measures to ensure that your bills are as low as possible under a time-of-use plan, such as developing an energy schedule or using a smart thermostat to adjust temperatures during peak hours.

Consider installing a battery

Many homeowners are considering installing energy storage as a backup power source during power grid outages and to combat time-of-use electricity rates during peak hours. With a backup battery, you can charge your battery during off-peak hours when electricity rates are at their cheapest and then discharge and use electricity stored in the battery during peak hours. In addition to taking advantage of a lower TOU rate, you can also get incentives and rebates to make investing in energy storage for your home more affordable.

Think about going solar

Using clean energy can help you reduce energy costs. Solar panels can lead to thousands of dollars in electricity savings over 30 years because you’re generating your power instead of buying it all from your utility. If you have time-of-use rates with your current rate plan, the credits you get for sending excess solar electricity back to the grid will depend on the time of day. If your solar panels produce lots of electricity at peak hours, you’ll receive credits at the peak hour rate, which you can use later. However, that also means you’ll be credited at a lower rate for the electricity you send back during off-peak hours.

In the Northern Hemisphere, while south-facing roofs are typically where solar panels will generate the highest amount of electricity, panels on western-facing roofs will generate the most during peak hours. So, it’s a good idea to talk to your solar installer about the best design for your system so that you maximize your solar savings under your TOU plan.