Does electricity cost less at night? With electricity costs running higher around the world, many people have questions about how their energy usage is billed throughout the day. Whether you are on the grid, pulling energy from power plants, or utilizing solar panels of your own, it’s likely you are being effected by what are called “peak hours” and “off peak hours.”
These two terms play a large role in determining the energy bills given to you by your local utility company at the end of each month. In this article, we’ll be answering all of your questions in relation to what determines electricity rates, peak hours, off peak hours, and more.
Why is electricity cheaper at night?
Like any commodity or consumer good, electricity prices will vary according to demand. As you can imagine, consumer electricity consumption decreases at night and increases during the day. This accounts for more expensive electricity rates during the day, and less expensive rates at night. [1]https://news.energysage.com/whats-the-cheapest-time-of-day-to-use-electricity-with-time-of-use-rates/
What are peak hours?
Utility companies charge consumers on a per kilowatt-hour (kWh) basis. As we previously mentioned, the rates also vary according to demand. Because there is greater energy demand during peak hours (also called peak demand), consumers end up paying more on their electric bills.
It will vary widely from location to location, but generally speaking, peak hours are a 4 to 6 hour window somewhere between 3 pm and 12 am. This is the time when both electricity use and demand will be at their highest. In the winter, however, peak hours can sometimes shift closer toward the morning, as consumers and businesses will turn up the heat to make their spaces more comfortable.
What are off peak hours?
As can be expected, off peak hours account for the time when electricity use and demand are at their lowest. Generally speaking, this will be in the early morning hours, between 12 am and 12 pm.
Many factors influence the exact determination of peak and off peak hours, but as we will dive into later in the article, much of the energy price is determined by appliance use.
Every utility plan is different. You can find out more about the price schedule for peak and off peak hours in your area by contacting your local utility company.
Understanding ‘Time of Use’ energy plans
Peak hours and off peak hours are two terms used to define electricity rates on time of use plans. As the name implies, time of use plans can cost more in the long term, but they also provide for some unique opportunities to save money.
Take a look at the different rate plans that most power companies offer:
- Time of use rate plans: Rates vary based on time of day and time of season. Exact prices will be determined by your local peak and off peak hours.
- Solar rate plans: These plans are becoming more and more popular as of late. Plans will also vary from place to place, but generally speaking, consumers experience large savings after upgrading their home with solar panels. Solar rate plans give consumers access to federal and state tax credits with the net metering program.
- Tiered rate plans: Rates will vary based on overall consumption, not time of day or season. This incentivized consumers to lower their energy consumption to achieve lower rates.
- Other plans: Local power companies may offer special utility plans if you are charging an EV (electric vehicle), or for reducing energy consumption on certain days of the year.
Best ways to save money on electricity
If you, like many, are looking for inventive ways to save money on energy, you have a variety of different options at your disposal. Let’s take a look at the best ways to save money on electricity.
1. Change daily habits to lower electricity costs
This will be the most common and feasible way to save money on energy costs. Prices can be over two times more costly during peak hours – or in other words, half the price during off peak hours. This presents a unique opportunity for consumers to save money during the cheaper off peak times.
It can take some planning, but consumers can see sizable savings by scheduling the use of their appliances throughout the day. Many appliances, such as dishwashers, washing machines, and dryers, all have scheduling functions that allow consumers to set times of use in advance.
Other energy habits worth changing include: [2]https://www.investopedia.com/articles/pf/08/save-energy.asp
- Programming your thermostat: By setting your thermostat to slightly higher temperatures in the summer, and slightly lower temperatures in the winter, you’ll be able to decrease energy spent on heating and cooling.
- Charge electric car only at night: Besides appliances, electric cars will also pull large amounts of electricity from your home. Prioritize charging them at night to minimize use during peak hours.
- Wait to charge appliances until late at night: This goes for everything from cell phones to laptops and yes, cars too!
If you are looking for a precise way to calculate your energy consumption without having to deal with the hassle of speaking with your local power company, be sure to check out our energy cost calculator.
By entering a few simple variables, you’ll be able to calculate the cost and power of your appliances. This can help tremendously in identifying which appliances account for the most electricity usage in your home.
2. Home upgrades
Your home’s ability to retain heat during the winter and retain cool air during the summer play a big role in determining the overall efficiency of the home. There are a few things you might want to consider in this regard:
- Update insulation throughout the house – especially in the attic to stop heat from escaping in the winter.
- Seal all the windows and doors to shore up any ongoing air leaks.
- Replace incandescent bulbs with LEDs – by some estimates, LEDs are 90% more efficient than incandescent bulbs and last up to 15 times longer. [3]https://www.nrcan.gc.ca/energy-efficiency/spotlight-energy-efficiency/2021/11/14/everything-led/23946
- Replace your desktop computer with a laptop – tech experts estimate that laptops use 80% less electricity than desktops.
- Install low-flow shower heads to improve water efficiency.
3. Go solar [4]https://www.energy.gov/energysaver/benefits-residential-solar-electricity
Perhaps the biggest home upgrade you might make to reduce your electricity bill is going solar. In addition to switching from energy produced at power plants to a renewable source, solar also offers a number of financial benefits.
In 2022, the tax credit associated with the net metering program is at a flat 30%. This means that if your solar installation were to cost $20,000, you would be eligible for a $6,000 tax credit. In addition to the credits offered through the federal net metering program, many state and local governments throughout the country also offer tax credits.
There is also the long-term savings to consider. Over time, homeowners that minimize energy usage with major home upgrades such as insulation and solar panels will experience thousands in savings.
Some utility companies will also offer credits for sending the excess power produced in the home back to the local grid. The rate that determines your credit amount will largely depend on your current rate plan. If your solar panels produce lots of electricity during peak hours, you’ll likely receive credits based on the peak hour rate. Similarly, you would receive less of a credit for excess electricity sent back to the grid during off peak periods.
Final Words
In the end, electricity rates are cheaper at night. The time of use plans that involve peak pay hours have caused many consumers to go searching for ways to make their homes more efficient.
As electricity demand goes up, we can all expect electricity rates to follow. Because of this, major home upgrades such as attic insulation, new window seals, and solar panels have become more and more popular.
Avoiding the higher electricity rates that are charged at peak times can be difficult, but with the right implementations, it’s possible for consumers to experience upwards of 40% in savings. Just running your major appliances during off peak times can make a major difference in decreasing your overall energy usage.
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