You should know about off-peak and peak electricity hours if you want to understand the time-of-use (TOU) electricity plan. These plans are essential in saving money since the rate you pay per kilowatt-hour for electricity fluctuates depending on the time of day.
Most utility companies employ these rates to increase electricity prices when it’s high in demand so that there isn’t any burden on the power grid. Consequently, this encourages customers to use electricity during low demand or off-peak hours when electricity prices are lower. Using off-peak and peak electricity hours efficiently can save energy costs by changing the time your home uses electricity.
Time-of-Use Plans
Also known as TOU, time-of-use plans determine the amount (as a price per kilowatt-hour) consumers will pay based on the time when the electricity is used, essentially aligning the cost of electricity production with the price.
Peak Electricity Hours
In peak electricity hours, energy is priced high, so anyone using that electricity has to pay an increased rate per kilowatt-hour. Peak hours can mainly vary by:
- Electricity company.
- Location.
- Season.
Retail electric providers and utility companies ensure that these hours don’t hurt any consumer and that the electricity grid is protected. They avoid situations where not everyone gets electricity to meet their needs.
Off-Peak Electricity Hours
Unlike peak hours, in off-peak hours, electricity demand is low, which ultimately means consumers will pay lower electricity prices. Another advantage is that electric and utility companies don’t have to spend as much to produce electricity because people use less energy during those hours. In short, when demand is high, so are electricity rates. When demand is low, so are electricity rates.
Super Off-Peak Hours
A few electric companies might create super off-peak hours. As demand is the lowest in these hours, so are electricity prices. Essentially, the goal is the same as that of off-peak hours: to distract the consumers’ demand away from peak hours, help normalise energy demands, and keep the electricity supply consistent.
Reason Of Use
The aim is to keep a steady electricity supply for all. This is why demand is distracted away from peak hours when the electricity supply is low to off-peak hours when it is high. When electricity consumption peaks, it’s harder to generate power quickly to meet that need.
Supply And Demand
Utility companies exist because their power plants are operational and generate enough power to meet everyone’s needs. Electricity demands aren’t consistent and vary due to the:
- The schedule of people.
- Seasonality.
- The time of the day.
If demand increases and electricity generation can’t be matched, grid operators purchase extra electricity from other sources, increasing wholesale prices and a higher rate per kilowatt-hour.
Energy-generating methods can differ too. Some plants might power up to maximum capacity within an hour, and others could take up to a day. In worst cases, electricity generation won’t match the high demand, which will cause blackouts.
Even though there have been shifts towards renewables, like in California, the grid is powered by clean energy sources like the wind or sunlight. However, the energy demand shoots up after sunset just as the sun sets on those solar panels.
This is why utility companies may have to revert to carbon-intensive sources that emit greenhouse gases. However, by enforcing TOU rate plans, electric providers can motivate people to use less energy in times of low solar energy and maximise use when solar power is adequate.
Saving Money
You should know about the off-peak and peak hours in your area. Also, check out the time-of-use rates to maximise your savings. This will require collecting data and researching a lot, but it will be worth it in the long term.