Time-of-Use Tariff
A time-of-use tariff prices electricity differently by time of day, and often by season, so the same kWh costs more in peak hours than off-peak. The size of that spread, not the average unit price, is what determines whether battery storage and load shifting are worth anything at a site.
A time-of-use tariff charges different amounts for electricity at different times of day rather than one flat rate around the clock. The day is divided into named periods, commonly peak, shoulder and off-peak, and in many markets those periods and rates also change by season. The UK distribution charges use Red, Amber and Green time bands; Eskom's South African tariffs carry a high-demand winter season with a peak rate several times the off-peak one.
For a solar or storage project the structure matters more than the headline price. A battery earns on the spread between periods, so a tariff with a low average unit price and almost no time variation gives it nothing to work with, while a higher-average tariff with a wide evening peak can carry a business case on its own. Two further properties decide the result: predictability, because a fixed-window tariff can be modelled as a repeatable daily cycle while a dynamically repriced one cannot, and coincidence, because a wide spread in the early evening is worth nothing to a site that closes in the afternoon.
Time-of-use pricing also interacts with export. Where the export rate is time-varying too, the question stops being self-consumption alone and becomes when to hold energy and when to release it.
Why it matters for solar installers
Tariff structure is the single input that most changes a proposal's numbers and the one most often reduced to an average. Modelling a project against a real schedule, month by month and hour by hour, is what separates a defensible saving from a multiplication. SolarVis holds tariffs per country and facility type, with weekday and weekend schedules mapping 12 months against 24 hourly periods, plus demand charges, standing charges and VAT, so the modelled bill is built from the same components as the real one.
Common questions
- How does a time-of-use tariff differ from a flat tariff?
- A flat tariff charges one unit rate around the clock. A time-of-use tariff splits the day into defined periods, typically peak, shoulder and off-peak, each with its own rate, and many markets also vary those rates by season.
- Why does the spread matter more than the average price?
- Two tariffs can have an identical annual average unit price and produce completely different battery savings. Storage and load shifting earn on the difference between the expensive and the cheap period, so a wide, predictable spread is worth more than a low average rate.
- Can a time-of-use tariff make a site worse off?
- Yes, if the site's consumption is concentrated in the peak periods and cannot be moved or covered from storage. Choosing a tariff and sizing a battery are the same decision, and modelling them separately is how sites end up on the wrong one.
