Time-of-use tariff

Written and checked by the Energy Merchants desk · Reviewed 3 October 2026

A time-of-use (TOU) tariff charges a different rate per kilowatt-hour depending on when you use the electricity. The usual blocks are peak, shoulder and off-peak, and the hours and prices are set in the retailer’s offer.

It reflects the cost of supplying power at busy times. For a household with solar and a battery, it changes the economics because stored midday energy can displace expensive evening power.

A worked example

The numbers below are illustrative, not a real plan. Suppose peak costs 45 cents per kWh, off-peak costs 20 cents and the feed-in tariff is 5 cents.

A customer with a 10 kWh usable battery that is 90% efficient charges it with surplus solar that would have been exported at 5 cents. In the evening it returns 9 kWh that would otherwise have been bought at 45 cents. The gain is 9 x 0.45 = $4.05, less the 10 x 0.05 = $0.50 of forgone export, so about $3.55 a day. Efficiency matters here, as covered in round-trip efficiency. Real savings vary with seasons and usage.

In practice

Installers use TOU rates to size a battery and to set its schedule. Some batteries can charge from the grid off-peak as well as from solar. That helps in winter, but it changes the savings model, so ask for the customer’s actual plan before you promise a payback figure. See simple payback period.

Smart meters are needed for TOU billing. Customers on old accumulation meters are typically moved to a smart meter when they change plan.

Common confusion

A TOU tariff is not a demand tariff. Demand tariffs charge on the highest 15 or 30 minute spike in the month, in kilowatts. TOU charges on energy at certain hours.

It is also not a feed-in tariff, which is what you are paid for exports. Both shape solar and battery value, in opposite directions.

For the certificate side, see battery STCs and the Cheaper Home Batteries Program installer guide. The glossary has more.