What is 'time-of-use' electricity pricing and how does it relate to battery backup systems?

Introduction to Time-of-Use Pricing

Time-of-use (TOU) pricing is an electricity tariff system where the cost of electricity varies based on the time of day it is used. This pricing structure charges higher rates during peak hours when demand is high and lower rates during off-peak hours when demand is low. The aim is to encourage users to shift their energy consumption to times when the grid is under less strain, reducing peak demand and potentially lowering overall energy costs.

How TOU Pricing Works

In the UK, TOU tariffs often include peak, shoulder, and off-peak hours:

• Peak hours typically occur during the day when demand is highest, often between late morning and early evening.
• Shoulder hours are transitional periods between peak and off-peak times.
• Off-peak hours usually occur at night or early morning when demand is lowest.

For example, certain tariffs offer a cheaper night-time rate for seven hours, between midnight and 8 am.

Relating TOU Pricing to Battery Backup Systems

Battery backup systems, such as home batteries, can complement TOU tariffs by storing excess energy generated during cheaper, off-peak hours and using it during more expensive peak hours. This can significantly reduce electricity bills for homeowners and small businesses.

Practical Applications

• Solar Pairing: If you have solar panels, you can charge your battery during the day when the sun is out and use the stored energy during peak hours when solar energy isn't available.
• Nighttime Charging: Charge your electric vehicle or run high-energy appliances during off-peak hours to save money.

Pros and Cons of TOU Tariffs with Battery Backup

Pros

• Cost Savings: Shift consumption to off-peak hours to reduce electricity bills.
• Flexibility: Battery systems allow you to use stored energy when prices are high.
• Environmental Benefits: Encourages off-peak usage, potentially reducing strain on the grid during peak times.

Cons

• Initial Investment: Installing a battery backup system can be costly upfront.
• Dependence on Timing: Benefits depend on your ability to adjust usage to off-peak hours.
• Limited Availability: Not all providers offer TOU tariffs, and some may not be available on comparison websites.

Practical Advice

• Assess Your Usage: Determine if you can shift a significant portion of your energy use to off-peak times.
• Compare Tariffs: Check if a TOU tariff with battery backup offers savings compared to a standard tariff.
• Plan Strategically: Use your battery to cover peak hours when possible, and charge during cheaper times.

Common Mistakes to Avoid

• Not Adjusting Usage: Failing to shift usage to off-peak hours can result in higher costs than standard tariffs.
• Incorrect System Sizing: Ensure your battery system is correctly sized for your energy needs to maximize benefits.
• Inadequate Monitoring: Regularly monitor your energy usage and adjust your strategy as needed to optimize savings.