How to Tap Into Super Cheap Energy: Time-of-Use Arbitrage Explained

by Anna Gretz
March 20, 2017
Home Battery

It’s easy to open up your latest electricity bill and just feel… stuck. It’s electricity, and you need it. Every day. So what can you even do about the growing price of power? A lot, actually.

Most people are put on a fixed-rate energy schedule by their utility company. This means that you pay the same rate for electricity, any time you use it. But what a lot of consumers don’t know is that many utility companies offer an alternative schedule, called a Time-of-Use (TOU) billing arrangement. The TOU billing schedule doesn’t just charge you one rate for electricity, but offers a cheaper price if you use power during the times of lowest demand (like the middle of the night), and a higher price for power during peak demand hours (during the evening).

Now, the majority of power customers don’t opt for the TOU billing schedule, because they need electricity during the peak demand hours, just like everyone else, and don’t want to pay more for it. But there is a way to use the time-of-use billing plan to your advantage, so that you can get electricity for the cheapest rates, all of the time. It’s not even that hard. All you need is a home battery.

This strategy of security the lowest electricity cost for your home every day, is called Time-of-Use Arbitrage. It sounds fancy, but it’s actually really simple if you know how to do it. Here’s how it works: Home battery owners charge up their batteries with the cheapest power available during the night, and use that stored power in the evenings, instead of sucking power from the grid. When homeowners do this, they end up getting the lowest electricity rates available even when the power companies are charging the most for electricity. In fact, battery owners can even get software that will do this for them automatically, so they don’t even have to think about it.

The great part about this arrangement is, it’s actually good for everyone. Battery owners get to slash their electricity bills, which is of course, awesome, and utility companies get one less customer demanding electricity during peak hours. With home batteries, everyone’s winning.

You’ll be glad you know how Time-of-Use Arbitrage works soon, because the US is increasingly moving in the direction of time-of-use rates and peak demand charges, as more areas face the reality of the weak, aging electrical grid. The amount of electricity people are using in the evenings is growing FAST, making it necessary for utility companies to build natural-gas powered “peaker” plants to supply power during the evening surge. These plants are really expensive, since they only ramp up a few hours each day, and they have to handle a huge amount of electricity, not just the average. Utilities want to pay off these plants by charging consumers more during the times the plants are in operation… hence the peak demand charges. TOU may become required instead of optional sooner rather than later.

Time-of-Use Arbitrage is awesome for home battery owners. It’s even better for home battery owners who also have rooftop solar. Rooftop solar takes TOU shifting to a whole, new, bill-slashing level. Solar owners get to combine the time-of-use strategy with another awesome way to work the electric utility system: net metering.

Net Metering is a way for solar-equipped home to sell extra power back to the grid. In many states in the US, solar customers are given the opportunity to make money from the power they generate that they don’t need to use. Think about it: solar panels generate power during the day, when many homeowners are at work, or using natural light sources. They don’t actually need to use the energy being produced at the time solar panels are producing it. This is where batteries come in: home batteries can store solar energy during the day, so you can use it when you actually need it. And if you don’t need it, you can sell it back to the grid for a profit, since you generated it for free with energy from the sun.

This is where things get really interesting. Since solar owners are soaking up free energy from the sun, their electricity rate is even lower than if they were charging their battery in the middle of the night. Instead of a lower rate, they’re not paying anything at all. And if they don’t use all of their free electricity, they can even sell it.

When it comes to power usage, solar+battery households are working it. But even if you’re not ready to invest in solar, a home battery can still give you a ton of benefits--more than just a lower electricity bill.

Home batteries give you a lifestyle of independent, secure energy. Remember when we mentioned the aging power grid? Well, that aging grid is dishing out six times more power outages than it used to. Home batteries protect homes from random outages by having electricity on-hand in case you need it when the grid shuts down. For people who depend on electricity for work, for heating and cooling, or for medical equipment, this can be a huge deal. But let’s face it: no one wants to deal with power outages. With home batteries, you don’t have to.

If you’re ready to tap into cheap energy all the time, hit up a Swell rep for a free home battery evaluation, and to hear about any free funding you might be eligible for.

You need electricity, but you don’t need expensive electricity. Home battery owners get it. Slash your bill, and take your power into your own hands.