• If you’re an SDG&E customer, you’ve probably heard about their “When Matters” campaign. “When Matters” is an awareness campaign to help customers understand that when they use electricity determines how much it costs. While it is true that SDG&E’s new Time-of-Use rates change the price of electricity during different times of the day, the good news is that if you go solar, those different prices won’t really matter very much. Let’s look at what Time of Use (TOU) means for San Diego homeowners, and how going solar can alleviate the worries associated with using appliances and electronics during expensive peak hours under Time-of-Use.

    Time-of-Use Rate Structures

    The concept behind TOU rates is that electricity costs more at certain times of the day based on demand. Utilities explain the reason they implemented TOU is that during the times when demand for electricity is highest (e.g.,late afternoon to evening) they must use more expensive forms of power generation for relatively short amounts of time (such as gas turbine “peaker” plants) in order to meet demand and this causes their costs to be higher, so they want to pass this cost along to their customers.

    In addition, making electricity more expensive during these times of high demand helps discourage customers from using their appliances during those times, thus reducing overall demand for the power company.

    TOU rates make electricity much more expensive in the late afternoon, typically from 4pm-9pm, and cheapest late at night (after midnight to 6am). They refer to the different times / rates as on-peak, off-peak, super off-peak. In order for homeowners and renters to avoid the highest charges, they are discouraged from using major appliances like washers, dryers, and dishwashers during peak times in order to avoid high charges. This can be a huge inconvenience for many people, so TOU rate structures can be seen as a negative for the customer.

    Time-of-Use in SDG&E

    TOU has technically been used in SDG&E territory for over a decade, but back in March of 2019, SDG&E began transitioning thousands of their residential customers to a TOU rate structure with plans to eventually transition all residential customers. 

    Under TOU rates, electricity costs change not just throughout the day but also change seasonally as well. In the Summer, rates are higher than in Winter, and there is also a larger difference between on-peak and off-peak rates in the Summer. For both seasons, weekends are cheaper than weekdays.

  • Currently in the “winter” months, during the week, on-peak rates are from 4pm-9pm, off-peak are from 6am-4pm and 9pm-12pm, and super off-peak are from 12am-6am during the week. On the weekends, super off-peak is between 12am and 2pm, off-peak is from 2pm-4pm, and on-peak is between 4pm-9pm. 

    There are different TOU rate structures SDG&E customers can choose from based on when their typical usage is, and whether or not they have solar. For non-solar customers, the choices are between TOU-DR1 (the standard rate structure), TOU-DR2 (no super off-peak times), and TOU DR-P. 

    SDGE When Matters Campaign

    In order to better educate their customers on TOU rates, SDG&E has been publishing videos, content, and sending out fridge magnets to make their customers conscious of their energy usage, directing them to their URL https://www.sdge.com/whenmatters to learn more. On this site they have information about TOU, energy efficiency suggestions, as well as suggestions as to when to use energy to minimize use during on-peak times for all types of appliances. While all of this is very helpful, especially for renters, the one thing they don’t mention is how going solar can make it so you can avoid all of this worry about times you are using electricity. 

    TOU and Solar Energy

    If you’re unfamiliar about how SDG&E treats solar energy customers - here’s a quick explainer of how it works through something called “Net Metering”:

    When you install solar on your home, you’re connected to the grid so that you can both send and receive energy. During the day, when the solar you installed is producing a lot of power and your usage is low, the extra unused energy is sent back to the grid and sold to SDG&E for credit through a system called Net Metering. With net metering, you can sell your extra power to the power company for credit during the day and then buy back what you need at night, only paying your power bill for the “net difference” between what you produce and use – once a year.

    But what does the power company due when they have too much power during the middle of the day? There is so much solar being produced now that the utilities sometimes have extra power in the middle of the day. To some extent, they can use transmission lines to sell this extra power to utilities in adjacent states who may find it cheaper to use than turning on their own power plants. In California and several Western states, there is an organization called the “Energy Imbalance Market” that is designed to do just that. However, until more transmission lines are installed to increase capacity, this solution is limited by availability of open transmission lines, especially eastward over the Rocky Mountains.

    In addition, when the solar energy begins to drop off at the end of the solar day (around 4-5pm) and people come home from work in the summertime and turn on their air conditioners, the utilities must very quickly replace the missing solar power plus ramp up added power as the load increases. This is called the “duck curve” due to its appearance on a graph and it presents a problem for the utility company.

  • In the summer, the hours of 4-9pm are especially problematic so to counter this, the utility companies have changed the pricing of electricity from being based on how much you use each month to the time of day that you use the power. During the weekday hours of 4-9pm (June-Oct), electricity now costs twice as much as it does during the rest of the daytime (56 cents vs 28 cents, generally). And from 12 midnight to 6am, the power costs half as much. This new rate structure is known as “TOU”.

    It used to be that solar sent back to SDG&E would be bought back at the same price no matter what time of the day it was. Now, with TOU, that has changed.

    Under TOU, the price that SDG&E pays for solar power is the same as the cost of buying power from them in that same time period. So mostly, when you’re producing the most power, which is during the day in off-peak, SDG&E is paying you credits at that same low rate. So unfortunately, when power costs the most from 4pm-9pm is when you are creating less solar power, so you are using the solar credits you earned at the low off-peak rate to buy power at the high on-peak rate. 

    Fortunately, there are still ways you can leverage solar to fully offset TOU charges so you don’t have to worry about your usage at on-peak times.

    Offsetting TOU Rates with Solar

    Even with TOU rates, solar can enable you to offset on-peak rates so that you don’t have to worry about your electrical usage during those times. There are two ways to leverage solar to do this:

    Change Your Rate Structure + Add Extra Panels

    Back in early 2018, SDG&E made it a rule that all homeowners who went solar would be put on a rate structure called DR-SES. With this rate structure, in the Summer months, the swings between on peak ($.053/kWh) and off peak ($.029/kWh) rates are huge, with on-peak rates being almost double the off-peak. This means that the credits you are producing during the day are worth less, and the amount you are paying for on-peak power is more, which makes it harder to offset the on-peak times. 

    What many homeowners who install solar don’t know is that they can choose a different rate structure with flatter, more similar rates between on and off peak times. This rate structure is called TOU-DR, where, in the Summer, the on-peak rate ($0.55/kWh) is closer to the off-peak rate ($0.33/kWh), which means you get more credits for your extra power generation during the day, and pay less for the on-peak rates.

    So by switching to TOU-DR and increasing your solar production above 100% of your needs by adding 3-5 more panels (for example), you can still offset the increased price of power between 4-9pm by simply selling more back during the prime production hours of 9am-4pm. However, if your power needs during peak period (4-9pm) are still very high, you may need to store the power in a battery at your home during the day and then use this stored power during peak period instead of buying it from the power company at the peak rate. This is called “time shifting” your solar power; it is also called “arbitrage power” because you’re storing power when the cost is lower and using it or selling it back when the cost is higher.

    Install Solar + Battery Storage

    Another way to offset on-peak times is to install battery storage with your solar panels. That way, when you create that extra power during the day, instead of selling it back to SDG&E for the off-peak prices, you can store it in your battery and save it to be used for later during on-peak usage times. Then you can use the extra power stored in the battery instead of having to buy power from SDG&E at the high prices. Tesla Powerwalls are a great battery brand we offer to do just that.

  • So as you can see that, by installing solar, and either adding a battery or installing extra panels and switching your rate structure, you can fully offset SDGE’s on-peak times under TOU such that you don’t have to worry about your usage in those times. So if you’re a homeowner in SDG&E territory and you’re tired of worrying about using your washer, dryer, or dishwasher during on-peak times, you should consider going solar so that you can offset your usage in those times. By installing solar, you can go from “when matters” to “doesn’t matter” when it comes to using power. Contact us today to get your free quote and learn more about offsetting Time-of-Use rates in San Diego.

  • About the Author

    Michael Powers


    Michael is one of the founding partners of Stellar Solar. In 2001, he helped launch The Home Depot’s national solar energy program which is now offering home solar through hundreds of stores in nearly a dozen states. He is a writer and marketing professional with over 30 years’ experience in the fields of energy, market intelligence and leadership training. He currently serves as treasurer and board member of Global Energy Network Institute (GENI), a San Diego-based non-governmental organization that advocates linking renewable energy resources around the world using electricity transmission.