How Home Batteries Can Help You Fight Time-of-Use Rates

Home batteries are the hot new accessory in the solar world. 

More homeowners than ever before are pairing batteries with their solar panels. Installing a home battery can supply you with backup power during a blackout. But there's another big benefit to home batteries beyond just keeping the lights on.

Using a home battery to take advantage of time-of-use rates, where electric utilities charge different prices for power at different times of day, can help lower your utility bills even more.

Here's what you need to know about how time-of-use rates work, and how you can make the most of them.

What are time-of-use rates?

Time-of-use rates are when an electric utility charges you a different rate for electricity depending on the time of day you're using it. This means higher rates during "peak" hours when demand for electricity is highest, usually in the afternoons and evenings. Electricity rates become lower during the off-peak hours (the rest of the day).

The idea behind time-of-use rates is twofold: They're meant to accurately price electricity based on the cost of delivering it at any given time, and they're signals sent to customers that nudge them into using less power during peak hours, according to Amy Heart, senior vice president of policy at solar installer Sunrun.

Not everyone can respond to those signals. Even if you want to reduce your power usage during peak hours, you might have no choice but to run your air conditioner or do laundry during those hours. 

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The good news is that time-of-use rate plans are usually optional, something you have to choose to switch into from a traditional flat-rate plan. 

This is ideal, Heart said, because it allows people to get used to the idea or try it out, rather than being forced into it.

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But even if you can't change your power usage during peak hours, you can still take advantage of time-of-use rates. That's where a home battery comes in.

How can a home battery save me money on electricity?

When you pair solar panels with a home battery, it opens up a lot of possibilities. 

Your solar panels are going to soak up the most sunlight and generate the most power during the middle of the day -- when most people aren't home to use it. Rather than sending that power back to the grid, a home battery allows you to store that energy and use it later.

If you're on a time-of-use rate plan, you could choose to deploy that stored electricity during peak hours to avoid drawing power from the grid and paying high electricity rates. 

It saves you money, but it also reduces the load on the electrical grid, which can help prevent blackouts. "Every electron counts," Heart said.

The best part is that you can do all of this without even thinking about it. Most home batteries come with software that your installer will upload your utility data into, so it'll know when the time-of-use rates are and automatically deploy battery power during peak hours. There's no need to change your behavior or even "switch on" the battery. The software is there to optimize your energy consumption and save you the most money possible. It does this all automatically.

Is a home battery worth it?

It really depends on your personal situation, energy needs and budget.

A home battery has lots of benefits, like providing backup power during an outage and helping you fight time-of-use rates. But it's also an added upfront cost to a solar installation. Home batteries can cost between $10,000 and $25,000, or more.

Heart recommends you start by considering your current and future electrical needs. Is your household expanding or shrinking? Are you going to add big new electric appliances or an EV charger? These factors all affect how much energy you need, and how valuable a home battery might be for you. A solar installer can help you run the numbers on potential savings from a solar or battery installation.

You also want to learn what the time-of-use rate setup is with your utility. Consider how often you face power outages, and how useful backup power might be for you.

"Take the time and think about all of that with a trusted partner," Heart said.

If you're going to invest in a home battery, the standard advice applies: get multiple quotes and make sure you're working with a reputable company. You should also check to see what kind of warranty the system comes with, and understand what sort of maintenance will be required during the life of the system.